CIPD and Resolution Foundation – Weighing up the wage floor: Employer responses to the National Living Wage.

Rachael Saunders, Business in the Community Age Campaign Director reports on good news for apprentices for older people. 


Rachael Saunders


Yesterday morning (24/02/2016) I attended the launch of a Resolution Foundation and CIPD report which seeks to understand the likely impact of the National Living Wage (NLW) – the government intervention which sets a higher minimum wage for people over 25.
Policy around low pay is important to our campaigning on age  because, in the UK, many of the people currently working beyond 65 are doing so because they need to  – limited pension savings, many of them a life long insecure relationship with work, sometimes because of time taken out for children or elder care – mostly women.  We want to create an economy where we all have choices in later life – and that includes access to good work for those who have low skills and need to keep earning.    

Pay is an important component of good work, and on the face of it, the increase in pay rates is great – but the concern is that, whilst the Low Pay Commission has commanded broad support for the way it has managed increases to the minimum wage, the rates for the new NLW were set by the chancellor outside of those processes.  
A number of Business in the Community members I have spoken to are concerned about the age differential in the new rate – young people under 25 are still on the previous national minimum wage pay rate.  The lower rate is intended to act as an incentive to employing younger people, on the basis that they have less knowledge and skill – but it is illegal to make a recruitment decision on the basis of someone’s age, and employers will want to hire the best person for the job, rather than the person who will be (temporarily) cheaper.  

Increasing productivity is the holy grail for government at the moment, and is cited in the report as one of the ways in which business adapted to the original introduction of the minimum wage.  The challenge is to find productivity solutions in low paid sectors.  Nick Boles, the skills minister and keynote speaker at this morning’s event, suggested automation as the solution, and gave the example of digital shelf labels, rather than paying someone to change paper labels every time a price changes.  Encouraging digital solutions to replace low paid employees feels risky to me, but implies real confidence from government in our ability to move people into skilled work.  Access to training and development is crucial to that – I asked the minister if the apprenticeship levy could be used to pay for older apprenticeships, both for existing staff and in recruitment, and got a firm and clear yes – good news.  

Exciting times in labour market policy – and lots of opportunities to bring older workers and the needs of the missing million of people over 50 out of work who want a job to greater public attention

Read our research on the Missing Million >>