Last month, an increased national minimum wage was introduced across the nation. So of course, every company that uses the national minimum wage as the basis for paying employees was expected to increase the current pay to be in line with the government standard. Employers that choose to pay employees above national minimum wage had to reassess and create a new wage that was competitive enough to retain their best and most talented employees.
Overall, the national minimum wage rise is great news for all working individuals but especially for the lower paid workers across the UK as it provides them with a little boost in pay. But what about the implications of the increase in minimum wage for businesses?
How The Rise in National Minimum Wage Can Affect Businesses
An increase in the national living wage and national minimum wage can be incredibly beneficial to businesses in regard to current employees. There are many factors that contribute to the success of a business such as employee productivity, satisfaction at work, morale, and many others. All of which have the potential to be affected positively by a national wage increase.
The national minimum wage is a standard set by the government so that it is guaranteed that employers pay their employees. A rise in the national minimum wage affects businesses in the sense that they have to comply and raise the wage of their employees to match, also.
Employee Morale
In the past, the wage offered was typically the sole determining factor of whether an individual chose a job or not. Recently, even though this still rings true, many people also look for a job they know they’ll be satisfied with. Otherwise they won’t enjoy going to work or even being at work and that can affect both your employee and your business’ productivity or project completion rates negatively.
It can improve moods and morale in the workplace which is an important consideration because higher employee morale often results in many things, one of them being better customer experience.
Employee Turnover Reduced
An increased wage for employees can really benefit the business when it comes to employee turnover rates.
Low pay and dissatisfaction with a job or home situation can affect businesses harshly. High employee turnover costs businesses lots of money. Some estimates have hinted that replacement employees and hiring new employees can cost businesses large sums of money – £50,000 large. This isn’t the only incentive out there for wanting to retain employees and have a low employee turnover but it certainly is a hefty motivator.
Obviously, a higher national minimum and living wage does affect businesses financially as they have to spend more for every employee. But if they can retain employees and reach a low turnover, the costs of the increase can right itself over time through increased retention rates.
Consult with HR Advisors
Metis HR is an expert in providing HR advice that is tailored to your and your business’s needs. We will consult with you to make an informed, knowledge-based decision that is most ideal or suitable for your company.
Simply contact Metis HR if you are confused on what to do or if you would like to know more about the services we offer. To discuss the next stages for your company, please contact us at info@metishr.co.uk.
If you would prefer to speak directly with an experienced HR Consultant, please give us a call at 01706 565 332. We look forward to hearing from you.
