Calls For National Living Wage To Be Scrapped

Around 5% of workers are currently paid the minimum wage, with the National Living Wage set to raise from £7.60 in 2017 to £9.02 by 2020

Calls For National Living Wage To Be Scrapped

Calls have been made to scrap plans for the National Living Wage (NLW) as it’s suggested its implementation could lead to unemployment.

A report from the Adam Smith Institute says that as businesses will need to fund the wage increases themselves, there’s a possibility they’ll hire fewer workers, automate certain processes, rise consumer prices or outsource their work abroad to make up the costs.

If prices are increased, it’s argued that this will disproportionately affect the least well off in society as the cost of living will be increased.

Around 5% of the UK workforce is currently paid the minimum wage, but this proportion is set to grow as the NLW rises from £7.50 in 2017 to £9.02 by 2020

Sam Bowman, executive director of the Adam Smith Institute and co-author of the paper, said:

“We need to do everything we can to raise the incomes of Britain’s worst off workers, but there is a huge danger that the National Living Wage will actually end up hurting them by reducing employment.

“There is an important difference between the National Minimum Wage and the Living Wage, in that the former is set by a panel of experts with a mandate to minimise the risk of job losses, but the Living Wage is set by politicians whose main interest is looking good on the Ten O’Clock News.

“That’s a recipe for disaster, and we believe that direct cash transfers like tax credits or a Negative Income Tax would be much less risky ways of helping people at the bottom than the National Living Wage.”

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