How Will the New Minimum Wage Affect Your Business?

recruitmint • May 12, 2019

As of 1st April this year, a new national minimum wage was introduced. If you are unsure of how this affects your business and what it can mean for your employees, we break down the facts and figures…

The new minimum wage has resulted in a pay increase from £7.83 to £8.21 for adult workers over the age of 25 years old. It has also meant a pay increase of £7.38 to £7.70 for workers aged between 21 and 24 years old.

Workers between the ages of 18 and 20 years old will have their wages increased from £5.90 to £6.15 with the new minimum wage, and those workers aged 16 and 17 years old will see their pay of £4.20 increased to £4.35. Meanwhile, apprentices aged 19 years old and under in the first year of their apprenticeship will see an increase of 20p, taking their wages from £3.70 to £3.90.

Who will the new minimum wage affect?

The new minimum wage will affect businesses that pay their employees minimum wage; these are the only businesses that will be directly affected. Companies paying their employees minimum wage will need to increase pay rates, which will result in an extra cost for every hour those employees work.

How will the new minimum wage impact a business?

From an operational point of view, the businesses that are paying minimum wage to their staff members will notice a direct impact on their operating profit. This is because more of the profit that the business was making, will not be going to the employees to make up the gap between the old and new minimum wage rates.

How can a business avoid a negative impact?

There are different ways that your business can avoid a negative impact with the new minimum wage; specifically dealing with the impact on their employees. Businesses could reduce the headcount and have fewer employees on shift at each time. A business could bring in new business, clients and sales to make up for this extra cost in wages. Alternatively, a business could put up their prices to cover the difference between the old and new wages for its employees.

As a business paying their employees above the minimum wage, the pay rates will now be less attractive unless they are put up too. The introduction of the high minimum wage rates could reduce the availability of entry-level jobs as companies pull back on low paid employment.

If you need help hiring staff for your team, then please do give us a call. We here at Recruit Mint can help your business find the right employees – so contact us now for more information or to chat about your hiring needs.

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