John Harding, leader of PwC's Employment practice, says:
"While already trailed in the recent report by the Low Pay Commission, the Chancellor's announcement that the National Living Wage (NLW) will reach two thirds of median earnings by 2024 (which is estimated to be in excess of £10.50 an hour) will be welcomed by many employees. On the other hand, employers paying the National Living Wage for workers aged 25 and over face an increase in their pay bill of 6.2% from April this year and will probably face a similar level next April, but extended at that time to workers aged 23 and over.
"This commitment of a National Living Wage equal to two thirds of median earnings by 2024 supports the Government's ambition to create a high productivity, high wage economy and a fairer society. That said, the proposed increases will create challenges for many employers in industries such as retail and hospitality who employ large numbers of workers close to the NLW.
"By April 2024 the plan is that the NLW will not only have reached two thirds of median earnings but will apply to all workers aged 21 and above as opposed to, from this April, being 60% of median earnings and only applying to workers of 25 and above.
"Given the challenges many employers are facing at the present time, the Chancellor and the Low Pay Commission are right to caveat that these plans are conditional on continued economic growth and that they will ensure that these changes do not result in job losses among the lowest paid workers in the UK.
"Finally, the impact of the recent change in the technical definitions in National Minimum Wage regulations should not be underestimated. Employers should be taking the time now to understand what impact these changes will have on their current operations as well as their future employment models."
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