As I’m sure you know, National Minimum Wage pay rates increased from October 1, 2016.
Just for the record here are the increases:
|Old Rate||New Rate|
|21-24 year olds||£6.70||£6.95|
|18-20 year olds||£5.30||£5.55|
|16-17 year olds||£3.87||£4.00|
In percentage terms the increases for employees other than apprentices range from just over 3.3% to just over 4.7%.
The important thing for businesses is to quantify the impact of these increases based on the age profile of your workforce - and take steps to make sure they don’t erode your bottom line.
Once you know the total budget cost you can look at your prices to see if there is any scope for small increases to offset the extra expenditure. If you really don’t think this is possible then the only option is to look at other costs in your business.
Businesses who successfully deal with the increase in national minimum wage rates will be the ones that have a specific cost-reduction figure. They will identify defined cost items, set cost reduction targets and track the actual savings made.
Business that don’t target specific price increases or cost reductions are likely to suffer.
If you need better tools and reports to model the effects of financial events like this, we'd be delighted to help. Just give us a call.