Brexit may have a detrimental effect upon future growth of the National Living Wage, according to a report by The Resolution Foundation.
The think-tank’s latest research indicates that leaving the European Union will detrimentally impact the anticipated growth of the national wage boundaries in coming years. The report stated that weak pay growth rates, as a result of such developments, would ultimately see around a 10p decrease in the projected figures for living wages. Specifically, the foundation’s report predicts that the National Living Wage in 2020 will hit around £8.20, less than previous estimations.
However, the report said the expected 10p-an-hour increase will still deliver annual rises of up to £600 for over 4 million workers in the U.K. In addition, it also calculated that subsequent increases in wages will help conditions for many, with around 800,000 individuals set to be out of low pay by 2020.
Conor D’Arcy, a policy analyst at The Resolution Foundation, said: “While there is much uncertainty over Britain’s long-term economic outlook, most economists agree that wage growth in the next few years is likely to be weaker than expected prior to the referendum.
“That means we’re unlikely to see the £9 national living wage that George Osborne talked about in this parliament. As we approach the autumn statement we’ll soon learn what the [national living wage] will be next year. An increase to around £7.50 will deliver a welcome annual pay rise of up to £600 for full-time staff.
“Though that’s less than the £800 raise previously forecast, it’s sensible that the size of the rise adjusts in line with wages of typical workers. This flexibility means that calls from some businesses to scale back the wage even further are wide of the mark.”
The National Living Wage initiative was introduced in April of 1999 by Tony Blair’s government, and has been steadily increasing since. The current rate was set in April 2016 and stands at £7.20, or £6.20 for under 25 year olds.
Previously, an increase in living wages for under 25’s was regarded as the centrepiece of the former Chancellor, George Obsorne’s economic budget targets that were set out earlier in 2015. However, this report raises serious questions about the viability of these targets in the post-Brexit economic climate.