Businesses and their suppliers will be put under extra strain with the steep rise of the national living wage from 1 April, but this must not result in workers being treated poorly, a key recruitment body spokesman has warned.
The Recruitment and Employment Confederation (REC) said businesses needed to ensure that NLW rises must be reflected in the treatment of temporary labour suppliers.
REC chief executive Neil Carberry said some of the UK’s largest companies were “trying to argue that a 10% rise in minimum wage shouldn’t be covered in the rates they pay for temporary staff”. This, he argued, was “unsustainable and drives poor treatment of workers. Payment practice needs to improve.”
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National minimum wage rates will change on 1 April 2024, with record-breaking annual increases of up to 21%.
The NLW will not only increase from £10.42 to £11.44, but will also now apply to employees aged 21 and over, instead of the previous 23 and over. In the future this may apply to all those over 18.
REC chief executive Neil Carberry pointed out that the rise was “far in advance” of both wider wage rises and prevailing inflation. It was bound to place “significant strain” on businesses in key sectors, notably those who sell directly to the consumer.
“Many businesses will face choices over raising prices, changing working patterns or shorter opening hours as they try to adapt in the midst of a recession,” said Carberry.
This was not to argue against the policy of the minimum wage, which had been highly successful, he added. This success, however, had been driven by involving employers closely in the process. For this to happen it would be best if the Low Pay Commission was put back in charge of the pace of increase based on insight from businesses and workers, said Carberry.
He said: “A politically driven minimum wage risks employment opportunities for the most vulnerable workers and the sustainability of many smaller local businesses, especially on our under pressure high streets.”
Carberry was concerned that the rise could damage relationships between firms and employment agencies. He said: “It is vital that businesses understand that their suppliers, including REC members supplying a million temporary workers every day, also face this increase. Approaches which seek to offload rising temp minimum wages onto agencies are unsustainable. When the cost of labour rises, that rate needs to be passed on.”
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