National Living Wage will cause poorer areas to struggle, think tank warns

Analysis conducted by think tank the Resolution Foundation has suggested that implementing the new National Living Wage (NLW) will have ramifications in lower-paying areas.

The report found that introducing the NLW will be particularly difficult in poorer areas and will prove an important first test of the new devolved economic leadership arrangements.

By the end of the decade, 23 per cent of the workforce will be affected by the NLW, however, a higher share of staff will see their pay increase in many lower-paying cities across England.

In particular, a higher proportion of employees in areas such as Sheffield (28 per cent), Nottingham (27 per cent) and Birmingham (26 per cent) are expected to benefit from the NLW. In contrast higher-paying cities such as Oxford (13 per cent), London (14 per cent) and Cambridge (15 per cent) will have a relatively low proportion of employees who are affected.

The Foundation warns the government that enforcing the new NLW will pose a significant challenge, and urges local authorities to increase their efforts in minimising job losses and ensure that large groups of workers do not get left earning only the legal minimum.

Adam Corlett, economic analyst at the Resolution Foundation, said: “The new National Living Wage will have a huge impact on low pay, particularly towards the end of the parliament as it approaches £9 an hour.

“But implementing the new wage floor will be challenging, particularly in cities like Sheffield where wages tend to be lower. National, local and new regional politicians must work closely with employers to ensure that the National Living Wage is a success, particularly in low paying sectors.”