NEW NATIONAL LIVING WAGE WILL TEMPT FIRMS TO REPLACE STAFF WITH ROBOTS, SAYS CBI BOSS
Graduates stuck in ‘stop gap’ jobs should get out of them as soon as they can, according to an industry expert who fears low-paid jobs could soon be replaced by machines and robots, as firms try to control their wage bill once the new mandatory National Living Wage (NLW) is introduced in April 2016.
John Cridland, director general of the Confederation of British Industry (CBI), says that although he supports higher wages for low-paid workers, he is worried that the planned series of mandatory rises in the next four years is a “big ask” for firms that employ large numbers of low-paid staff, and risks unintended consequences including job losses as firms replace people with new technology. The current plan is to raise wages by 5% a year to £9 an hour by 2020.
The controversial NLW (announced in chancellor George Osborne’s 2015 Summer Budget) will see minimum wage workers’ pay jump from £6.70 per hour to £7.20 an hour from 1 April 2016 for workers aged 25 and over. No explanation was given for its failure to boost wages for younger workers, whose pay will remain unchanged at £6.70 per hour for those aged 21 to 24.
In an interview with the Guardian, Cridland said:
“The national living wage is a gamble. If the government pushes up wages too fast and more quickly than business can accommodate, then business will take out people and replace them with machines.”
Cridland added that it was not in the best interests of the economy or of low-paid workers to have a “labour light service sector that results in forced productivity through a decline in the number of staff working in shops, restaurants and hotels”. He also made clear that he is not against raising the minimum wage to closer to a level that people can live on – he is just voicing concerns that pushing it up too fast could result in unwanted consequences:
“What I am proudest [in my career] of is sitting on the Low Pay Commission in April 1999 when one million low paid workers got a 25% pay rise and not one of them lost their jobs as a result. That was because the minimum wage was set at the right level.
“The national living wage of £9 an hour is a laudable objective. The increase to £7.20 next April looks OK, but you can’t guarantee what will happen in the next four years. Increasing wages by 5% a year for four years will result in 25% of people being on the national living wage.”
On Monday the voluntary living wage, set annually by the Living Wage Foundation and based on the cost of living in the UK, was increased by 40p to £8.25 an hour outside London and by 25p to £9.40 an hour in the capital.
* WILL THE NEW MINIMUM WAGE TEMPT FIRMS TO SWAP STAFF FOR ROBOTS?
Do you share John Cridland’s concerns about the risks of forcing companies to pay staff more than they can comfortably afford to? Or is this just scaremongering – and proof firms will do anything to keep their profits high? Have your say below!