4 April 2016 | 

Sixty-four per cent of retail chains operating in the UK plan to implement the National Living Wage (NLW) for all employees irrespective of age, according to a survey by global advisory firm Willis Towers Watson.

In addition, nearly half (45 per cent) report that they will exceed the NLW and pay up to £7.50 an hour.

The survey says that over a quarter (27 per cent) of employees currently earn less than the NLW, 43 per cent of whom are over 25.

The survey shows that small and large retailers are more likely to offer at least the NLW to all of their employees regardless of age, while only half of mid-tier retailers (10,000 to 49,000 employees) plan to do so.

Tom Hellier, UK practice lead, rewards at Willis Towers Watson, said: “It is good to see that a number of employers are embracing the spirit of the law and not just doing the bare minimum. Lesser implementation of the NLW to all employees is lower in mid-sized employers, but these organisations tend to have larger numbers of people in the under-25 bracket. With this in mind, it’s possible that the cost implications for mid-sized retailers are simply higher.”

Additionally the survey reports that 36 per cent of firms expect the NLW to affect higher earners, of which 38 per cent will review pay for the whole workforce, however, more than half (59 per cent) expect no impact on current staffing models.

Hellier added: “Only a small number of companies foresee an immediate reduction in headcount or recruitment activity, or an increased reliance on part-time or seasonal staff, although this contradicts some research which predicts long-term job losses. An area that does cause employers anxiety, though, is the potential for pay compression and, in particular, the potential costs associated with maintaining appropriate pay differentials across the organisation.

“Another common theme we see in the research is concern that the NLW will reduce retailers’ ability to differentiate from other organisations when it comes to pay. This will emphasise the importance of brand and the employee value proposition when it comes to attracting and retaining people into lower-paid jobs, which I believe will lead to some interesting innovation in this area in the months to come.”