30 September 2015 | Herpreet Grewal
London could support a minimum hourly wage somewhere between £7.05 and £8.00 without losing jobs, according to a report by think tank Centre for London.
The report states that in the 2015 Summer Budget the Chancellor of the Exchequer effectively raised the minimum wage to £7.20 for all people over 25. Using the latest data, Centre for London estimates that the capital could support a minimum hourly wage somewhere between £7.05 and £8.00 without job loss.
The report concludes that therefore it is likely that the introduction of the National Living Wage "will cause negligible job losses in London, at least once the initial adjustment period is over" because the minimum wage has always been set too low for the capital. Employers in London will in effect be going through the same process of adjustment that the rest of the UK has already been through with the introduction of the original National Minimum Wage.
The report did not seek to recalculate the London Minimum Wage on the basis of the new policy, according to the document. However, depending on whether policy-makers would be prepared to accept job losses, a London equivalent to the National Living Wage might be set significantly higher. There continues to be a case for London to be able to set its own minimum wages, reflecting the very different economic circumstances that operate in the capital.
The study says the immediate point to note is that the wages of the lowest-paid have risen more slowly in London in the past two years than they have in the rest of the country.
For example, in the year to April 2014, the pay of cleaners, and that of sales and retail workers, rose by 2.2 per cent across the UK as a whole, but in London the equivalent rises were only 0.7 per cent and 1 per cent respectively.
Supermarket chain Morrisons is intending to increase its hourly pay rate for store staff to £8.20 an hour from a previous minimum of £6.83. More than 90,000 staff will benefit - across all age brackets - and Morrisons will make an extra investment of more than £40 million in the improved hourly pay rate. Supplements, such as a premium for working on Sunday, will also be simplified. This follows moves by other retailers such as Ikea and Lidl to pay staff a new wage.
The report can be found here.