London Living Wage no risk to economy, says mayor

London mayor Boris Johnson has insisted that employers in the capital would not be putting jobs or the economy at risk by bumping up low earners’ salaries.

Johnson earlier this week called on all London businesses to pay at least the London Living Wage (LLW), which he has increased to £7.45 per hour.

The National Minimum Wage is just £5.52 per hour, and Johnson admitted that many employers needed convincing that raising wages was prudent in the current situation. Prime minister Gordon Brown has repeatedly called for employers to keep pay down at all levels to tackle soaring inflation.

But Johnson insisted that the LLW would not be damaging to the economy even if widely adopted. He told Personnel Today: “We have looked into this and we don’t believe there would be much inflationary impact whatsoever.”

A report has found that many businesses feared they would have to cut jobs and slash training budgets if they had to pay the LLW.

The poll of 275 employers by the London Chamber of Commerce and Industry (LCCI) found that 42% would consider jobs cuts if they had to pay the wage. Almost half said they would cut back on investment and expansion plans, while 26% would reduce their training budgets.

LCCI policy director Helen Hill said: “These figures show the folly of the LLW. It is easy to agree to pay 35% above the national minimum wage if you are a large global banking group, or if the taxpayer is footing the bill, but this is a huge ask for many firms in the capital, especially in the current economic climate.”

Johnson insisted: “No-one is talking about compulsion. Businesses might actually find it cost-effective in making staff happier and more productive, and reducing staff turnover.”

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