Chancellor George Osborne in his budget speech announced a new National Living Wage which is to be introduced for all workers over the age of 25. This will see the hourly rate increase to a minimum of £7.20 from April 2016 and will rise gradually to reach £9.00 per hour by 2020.
Whilst (most) employees will applaud this, small business owners with a high low-wage workforce may struggle to meet the growing financial demands placed on them, despite the corporation tax cuts and employment allowance increase also implemented in this budget. This is because for small businesses, the contributory pension regulations which came into force by way of the Pensions Act 2008, will become applicable to all businesses in October 2015.
Younger employees also may well be left wondering why the age limit of 25 years has been set – especially in an age where discrimination on the grounds of age is well established.
However, younger employees could well benefit from the increase in apprenticeships which the Chancellor is encouraging. The Chancellor has stated that the larger companies will pay a levy and the revenue from this will help fund all post-16 apprenticeships in England. Ultimately, the goal is that employers will be able to control how the funding will work and those companies that are committed to training will be able to “get back more than they put in”. As apprenticeships have their own minimum wage (set to rise to £3.30 in October this year), many employers will no doubt start to see the benefits of taking on apprentices.