Impact of the National Living Wage

The national living wage will lead to higher unemployment and greater influx of people from Europe wanting to work in Britain, an MP has warned. Shipley MP Philip Davies welcomed higher-pay for low paid workers but said the increase would have “consequences” and did little for people struggling to find work. Mr Davies said: “We all know that if we want to reduce the consumption of something—if we want less of something—we increase its cost. If the Government want fewer people smoking, one of the tools they use is to put the price up. If we want fewer people drinking, we put the price up. The same rules apply to employment: if we put up the cost of employment, we will find fewer people employed—that is just an economic fact.” His concerns are shared by the independent Office of Budget Responsibility which estimates 4 million hours a week will be lost, half from reduced hours for worker and the rest from 60,000 lost jobs. As of this month over 25s are paid £7.20 an hour which is expected to rise to £9 by 2020. Mr Davies added: “The OBR has made it clear that it will result in fewer people being employed. When I worked for Asda, every employee was given a ten per cent discount card. I have no idea what Asda’s policy is today—it may well be the same—but it used to employ a lot of people with families, and a ten per cent discount card was a very valuable commodity to them. “We should be wary about forcing employers to put up pay, because the inevitable consequence will be that some benefits might have to go if they want to keep the same number of people employed in their stores. These decisions have consequences, and we cannot pretend that increasing people’s pay will not have consequences.” Mr Davies told the Commons employers had raised concerns over having to increase the wages of all staff to cater for different grades or experience, which in turn could lead to fewer people employed or fewer hours available for staff. Mr Davies also highlighted how difficult how it was for local retailers in his Shipley constituency to pay higher and higher wages. He said: “Many shops on our high streets are struggling and many small business owners are earning less than the minimum wage themselves and we must do all we can to help and protect them”. Mr Davies also warned the increased wage will lead to more people coming from the EU unless Britain votes to leave in June’s referendum.