According to the data collected and calculated by The Resolution Foundation, raising the minimum wage in the UK to £7.20, will only over burden employers by an insignificant 0.2%.
The wage bill in the UK will experience an increase of a mere 0.6% by 2020 when the rates are slated to be revised to a total of £4.5 billion if one is to go by the figures of the noted think tank.
Sectors that Are Likely to be The Most Hit
Sectors like health, education, construction and manufacturing are unlikely to witness a significant rise in costs though firms involved in social care may face challenges that are likely to be significant according to the report.
Uncertainty Looms Large
But the report also categorically stated that it was uncertain how the affected sectors would respond to the changes in terms of employment.
A Welcome Step
Conor D’Arcy who is an analyst of policy at the Resolution Foundation is of the opinion that the boost in wages is a welcome change to over six million workers. However accompanying the rise in wages, the wage floor will be driven towards territory which remains previously uncharted.
But with the economy regaining some of its former vigor most employers should be fine in the rise in pay, giving the lowest paid workers a chance to reap in the rewards of the economic recovery.
He also cited how past warnings about the negative impact on increase in minimum wages have proved inaccurate but the sectors of retail, hospitality, care and retail will definitely witness a challenging position.
According to D’Arcy the potential reaction of employers is uncertain with some going for a lesser number of fresh hires and fewer working hours but previous experience that by and large most pressures are absorbed by the companies themselves through incremental price increase, a small dip in the amount of profits and increase in productivity.