The National Living Wage, which gives millions of low paid workers a pay rise from this Friday, will impact the adult social care industry more than almost any other sector, according to research by the Resolution Foundation.
The foundation is a think tank that analyses the affect of Government policy on living standards.
In a blog post by analyst Daniel Tomlinson, the foundation people currently on the minimum wage will receive a pay rise of over 10% this week as the living wage kicks in.
Almost two million workers will have their pay increase.
“The gains don’t end there, because minimum wage rises also create ripple effects further up the pay ladder as employers seek to keep gaps between their lowest-paid staff and those on the next rung up. We estimate that a further 2.6 million employees will benefit indirectly from the NLW, taking the total number of beneficiaries to 4.5 million in 2016,” says Mr Tomlinson.
The affects will not benefit all workers equally, and nor will it hit all employers with the same force.
“We know around two in three workers set to get a pay rise are women. This reflects the fact that, although the gender pay gap is closing, it is still the case that women are more likely to be working in lower paying roles than men,” Mr Tomlinson states.
There will also be significant regional differences across the UK, according to Resolution Foundation analysis.
Up to a third of workers in some areas of Britain are set for a pay rise, with Torridge in Devon identified as Britain’s leading NLW hotspot. Over one in three workers (35%) are set for a pay rise this year as a result of the NLW – almost double the proportion across Britain (18%). The NLW is set to boost pay in Torridge by around £2 million.
Other National Living Wage hotspots include Rossendale in Lancashire, where 33% of employees are set to benefit from its introduction, Woking in Surrey and Castle Point in Essex (where 32% of workers will get a pay rise).
The top ten NLW hotspots also include Oadby and Wigston (Leicestershire), Forest Heath (Suffolk), Mansfield (Derbyshire), West Somerset, Breckland (Norfolk) and Rother in Kent.
The Foundation notes that while the NLW will lead to a particularly big pay boost in these hotspots, it will also put pressure on local employers who are more likely to see significant wage bill increases.
The analysis finds that the NLW will have far less impact in London and parts of the South East. Just 3% of employees in the City of London are set to benefit from the NLW this year, followed by Camden and Tower Hamlets (6%) and Southwark and South Cambridgeshire (both 7%).
Torsten Bell, director of the Resolution Foundation, said: “The National Living Wage is a hugely ambitious policy with the potential to transform Britain’s low pay landscape. Up to a third of workers will get a pay rise in National Living Wage hotspots, ranging from Canvey Island to Eastern Lancashire.”
“Britain’s new legal wage floor will be felt throughout the country, but its impact will be bigger in some areas than others. Relatively few employees will benefit in high-paying parts of Britain such as the City of London and Camden, reminding us of the need to see more employers sign up to pay the higher voluntary Living Wage.
“Of course pay rises don’t come free so employers in some sectors and parts of the country will feel the pressure more than others. That’s why it’s vital that businesses and national, regional and local government make the successful implementation of the new legal minimum a priority.”