National Living Wage: ‘not cut jobs’

Most firms had absorbed the costs from the NLW, reported a survey from think tank the Resolution Foundation.

It asked 500 businesses – including food and drink manufacturers – how the NLW was affecting their businesses.

Of the companies asked, about 36% said they had put up their prices to compensate for the higher wage cost, while 29% said they had reduced their profits.

Only 8% of the companies asked had cut back on staff terms and conditions, despite reports of some companies cutting paid breaks, overtime or bank holiday pay, to lessen the impact of the NLW.

The report followed protests by staff at Samworth Brothers’ last month (June 26) after the Bakers, Food and Allied Workers Union claimed disputes over cuts in pay and conditions made to offset the cost of the NLW.

Cuts in pay and conditions

Channel 4 News claimed it had seen company documents concerning the cuts in April of this year.

Earlier this year, the Office for Budget Responsibility predicted that the NLW would lead to 60,000 job losses in the UK by 2020.

However, Brexit could be a bigger factor in the success or failure of the NLW, warned the Resolution Foundation.

Weaker wage growth could reduce the projected value of the NLW by up to 40p an hour by 2020.

A spokesman for the Department for Business, Innovation and Skills told BBC News: “The government wants to move to a higher wage, lower tax and lower welfare society and the National Living Wage is a crucial part of achieving this.

“It is encouraging to hear that employers are investing in training and technology which will help to improve productivity.”

Effect on business output

Brexit has also had an effect on business output and optimism in the UK, with it slumping to a three-year low, according to accountancy and services group BDO.

In its report – which included food and drinks firms – job creation in the manufacturing sector had slumped to a two-year low.

BDO partner Peter Hemington said “The uncertainty prompted by Brexit has disrupted investment in the UK economy, but the signs of a slowdown were already showing ahead of the decision.

“In all likelihood, whatever arrangements the UK eventually arrives at with the EU won’t look very different from what we have at the moment. So businesses cannot afford to get caught up in the hysteria. They need to hold their nerve and continue to invest in the UK.”

Meanwhile, last week the Food and Drink Federation revealed a six-point Brexit road map.

 Late payments by supermarkets and investment in new equipment forced small and medium­sized (SME) food producers to borrow a record £1.72bn last year.