National Living Wage ‘has not hit employment’

The National Living Wage has not affected employment, says the body that monitors low pay for the government.

The Low Pay Commission said it had found “no clear evidence” of changes in employment or hours since the higher minimum wage was introduced in April.

It said employment had continued to rise even in sectors most obviously affected, such as cleaning, hotels, horticulture and retail.

The finding contradicts warnings from economists over the wage’s impact.

On Tuesday, the Organisation for Economic Co-operation and Developmentsaid the UK should be careful with plans to raise the National Living Wage, warning it could affect employment.

The think tank’s stance echoes the widespread claims of business organisations in the 1990s that the introduction of the UK’s national minimum wage – which started in 1999 – would lead to widespread job losses.

Those fears proved to be groundless, with the number of people in employment rising from 27 million then to nearly 32 million now.

‘No significant change’

The Low Pay Commission warned that “in some cases” employers may have reduced other staff payments or perks to fund the higher basic wage, but said it had found “no significant change” in levels of overtime and the higher hourly rates paid for working on Sundays or bank holidays.

The commission also said that the higher National Living Wage could “present challenges” for the social care sector, with many providers facing losses.

The National Living Wage was introduced by Chancellor George Osborne in his Budget in July 2015.

It came into effect in April this year, and was set at a rate of £7.20 an hour for workers aged 25 and over, with the aim of increasing it to £9 an hour by 2020.

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