Up to a third of workers in parts of Britain will gain from George Osborne’s national living wage when it is introduced this week, according to a thinktank that specialises in monitoring the living standards of people on modest incomes, reports The Guardian.
The Resolution Foundation said that in the top 10 low-pay “hotspots” at least 30 per cent of workers will benefit from the new legal floor of £7.20 an hour that will have to be paid to those employed and aged over 25.
The area with the highest number of beneficiaries, with 35% of employees receiving a wage increase, will be Torridge, in Devon. Rossendale in Lancashire, Woking in Surrey, Castle Point in Essex, Forest Heath in Suffolk and Mansfield in Derbyshire, were also in the top 10.
But the foundation said there was a marked difference between the hotspots and some London boroughs, where fewer than one in 10 employees will get a pay rise.
The City of London will have the fewest beneficiaries (3%) of the chancellor’s decision, announced in the post-election budget last summer, to uprate the minimum wage from 1 April. But six other London boroughs – Islington, Lambeth, Westminster, Southwark, Camden and Tower Hamlets – were among local authorities least affected.
The foundation said the relative lack of employees affected by the new wage level in some parts of the country underlined the importance of the campaign for a “living wage”, the Living Wage Foundation’s independent rate, which currently is set at £9.40 an hour in London and £8.25 in the rest of the UK.
The Resolution Foundation study found that Sheffield was the biggest hotspot for the government’s national living wage (NLW) in the large city regions across Britain, with 22 per cent of employees getting a pay rise this week.
Announcing his plan last summer Osborne set a target of a £9-an-hour living wage by 2020. “Britain deserves a pay rise, and Britain is getting a pay rise,” he said in his budget speech.
About 4.5 million workers will get a pay increase following the government’s decision, with the number rising to 6 million in 2020 if a £9-an-hour minimum is established by then.
Research published this week by the Resolution Foundation showed that the introduction of the NLW will mean a 10.8 per cent pay rise for those who have been on the minimum wage over the last year – five times the current 2 per cent increase in annual average earnings. The lowest earners are due to see their pay rise 50 per cent faster than average earnings over the rest of the parliament.
Torsten Bell, director of the Resolution Foundation, said: “The national living wage is a hugely ambitious policy with the potential to transform Britain’s low-pay landscape. Up to a third of workers will get a pay rise in [NLW] hotspots, ranging from Canvey Island to eastern Lancashire.
“Britain’s new legal wage floor will be felt throughout the country but its impact will be bigger in some areas than others. Relatively few employees will benefit in high-paying parts of Britain such as the City of London and Camden, reminding us of the need to see more employers sign up to pay the higher voluntary living wage.
“Of course, pay rises don’t come free so employers in some sectors and parts of the country will feel the pressure more than others. That’s why it’s vital that businesses and national, regional and local government make the successful implementation of the new legal minimum a priority.”