New national living wage will not lead to job losses in London

Centre for London report finds national living wage could be good for London – but the rest of the UK could suffer if made to pay the same rate as the capital

New national living wage will not lead to job losses in London

For some, the introduction of a national living wage is a double-edged sword. On the one hand, anything that boosts wages is a definite plus; on the other nobody wants anything that might jeopardise people’s jobs. Fortunately, there is some good news for those living in London, as a new report published by Centre for London and written by Kitty Ussher, a leading economist and former Treasury Minister in Gordon Brown’s Labour government, has revealed that the increase of the national living wage will not result in job losses.

Starting from April 2016, employees are required to pay those over 25 at least £7.20 per hour, with the government is aiming to raise it to £9 by 2020. Whilst the Office of Budget Responsibility has warned that the new national living wage will result in 60,000 job losses and the CBI and other business groups have decried the fact it will increase unemployment, the report announced that it will lead to ‘negligible’ job losses in London. 

It also stated that the national living wage would have to rise to £8 before it had any real impact upon employment in London. 

For its research, Centre for London used the Lay Pay Commission’s modelling techniques for setting the national minimum wage to measure the workforce impact of the national living wage. Whilst this found employment in London wouldn’t suffer as a result of the national living wage, the findings also highlighted the problems in applying a one-size-fits-all minimum wage across the entire country. The report is unequivocal that London could support a higher minimum wage but setting a rate for the whole of the UK at a level appropriate for London could have a negative impact on employment in other regions.

Ussher said: “Our research shows that there remains a case for a London minimum wage: even after the introduction of the national living wage for over-25s, low-paid younger people in London can get a pay rise without jeopardising jobs. But on top of that, it is now becoming clear that the 60,000 people across the UK who are estimated to lose their jobs as a result of the introduction of a national living wage are unlikely to live in London. It is time for the chancellor to explain where these job losses are likely to come and what his plans are to support those affected.”

So at least Londoners won’t have to fear making cut backs on their post-work pints too soon. 

Jess Mackinnon
Jess Mackinnon

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