National minimum wage impact divides industry
From April, the new national minimum wage was implemented at £7.20 per hour for those workers aged 25+. Retailer Next has said it will have to increase prices to cover the expected £27m cost of implementing the pay rise, but how will it affect the UK promotional merchandise industry?
Some members of the Briman group of British manufacturers said the living wage would have a negative effect on bringing business back to the UK from China where unskilled labour keeps production costs down. It was felt that, not only would those on the minimum wage get a pay rise but those above this level would expect an equal rise to maintain their pay differential.
Almost all distributors Product Media asked said it will have little or no impact on the basis they already pay above this rate. Some Briman members agreed: “We have always paid our team well in excess of the £7.20 per hour required. If we assume inflation at 4% and adjust accordingly, we will be paying the required £9 per hour by 2020. If our competitors are not paying a reasonable wage at present we should become even more competitive over the next four years.”
However, some manufacturers felt it would add further cost to the production process in an already tight margin industry. Lee Woodcock, managing director, Foremost Magnets said it was a good idea as it made no sense to support low paid workers with tax, but added that industry needed support.
“It can only be one part of a wider solution with welfare savings passed back to business as tax relief. Failing to do so will simply cause the cost of living to increase by the amount of extra income that the individual gains and the gap between income and cost of living will remain.”