The impact of the National Living Wage (NLW) – the new wage floor of £7.20 an hour for workers aged 25 and over, which comes into effect in April – will vary considerably across Scotland, according to analysis by UK independent think tank the Resolution Foundation.
By 2020, around 500,000 employees across Scotland – 22 per cent of the total – are set to be affected by the NLW, says the organisation, which works to improve the living standards of those in Britain on low to middle incomes.
But it says that a far higher share of staff will see their pay increase in some parts of the country than others. Around one-third (33 per cent) of employees working in Clackmannanshire and Dumfries and Galloway (32%) are set to benefit, whereas just 16% cent of those working in Aberdeen will be better off, with Edinburgh (17 per cent), Dundee (18 per cent) and Glasgow (19 per cent) also less affected by the new higher wage floor.
While strongly welcoming the new wage floor, the Foundation says that implementing it will prove a greater challenge in lower-paying areas and that minimising any job losses and ensuring that large groups of workers do not get stuck earning only the legal minimum should be a top priority for the Scottish government, the Fair Work Convention, local leaders and businesses across the country.
A focus on boosting productivity and progression in low paying sectors such as retail, hospitality, cleaning and care will be needed to ensure that the NLW is affordable for employers, says the Foundation. It is currently carrying out an employer-focused investigation with the Chartered Institute of Personnel and Development on how firms adapt to the new NLW.
The Foundation added that, despite the name, the UK government’s new legal wage floor is not a ‘living wage’, and there remains plenty of scope to expand the reach of the voluntary living wage, which is currently set at £8.25 across the UK.
Conor D’Arcy, policy analyst at the Resolution Foundation, said: “The welcome new National Living Wage will have a huge impact on low pay, particularly towards 2020 as it approaches £9 an hour.
“While our analysis suggests the pay rise should be affordable for most firms, implementing the new wage floor will be challenging for some employers. That’s particularly true in areas where wages tend to be lower. Politicians must work closely with employers to ensure that the National Living Wage is a success, particularly in low-paying sectors.
“It will take more than a higher wage floor to tackle Britain’s low pay problem. Governments and employers need to boost progression, making the most of employees’ existing skills and helping them to develop new ones. With the NLW set to rise significantly in coming years, it’s vital that positive steps are taken now before the higher wage floor begins to bite.”
Share of workers affected by the National Living Wage by 2020 across Scotland