It happens every tax year, and it is usually something that employers are not exactly enthused about. Of course, this is the rise in minimum wages.
Across the UK, the cost-of-living increase has meant that employers have needed to increase the minimum amount that they pay their workers. Of course, while this is great for the workers, for medium to smaller businesses, it has already had a far-reaching impact.
So, if you aren’t sure about how the minimum wage increase will impact your business long-term, read on to learn more.
Higher Operating Costs For Businesses
One of the most obvious impacts of the minimum wage increase for businesses is that there will be an increase in labour costs.
As a large number of businesses hire people on minimum wage, this increase will likely have a negative impact on the amount of money being spent per month on staff. This may lead to businesses seeking to cut down the number of minimum wage staff or look for options to keep them on without needing to have the minimum wage increase impact their pay.
For instance, in fast food restaurants, this could lead to the hiring of more teenage staff, as the minimum wage increase only applies to people over the age of eighteen. Of course, if you are looking for other ways to get around these issues due to a tight bottom line, an external agency like the HR Dept can be worth getting in contact with.
Some employers have already opted to try to make up the difference by increasing the cost of their products, but, of course, this can lead to lower sales, which in turn may lead to serious financial issues and even closures.
Changes in Hiring
Another thing to consider is the rise in temp staff or independent contractors. By going down this path, employers will be able to hire full-time staff on contracts, which means that they don’t have to pay the higher minimum wage. Alternatively, there may be a delay or freezing of the hiring process altogether, and turning to automation. In certain circumstances, businesses may also be looking to replace entry-level jobs for adults and have them filled by mobile ordering systems or even self-checkout machines.
If your business does not have the financial option to offer this, then it may be worth exploring how to improve the skills of the staff you have, to pay them more. Yes, you read that right! Having staff who are paid just above the minimum wage means that when the next increase occurs, it will not have such a large impact on your business’s bottom line. It can even be worth offering new staff an amount that is above the minimum wage from the outset, to avoid high staff turnover and achieve better retention.
Boost In Morale
OK, so this article so far has been a bit of a downer, but following on from the better staff retention, it is worth noting that with less pressure on finances, the staff that you have will likely have higher morale. Workers who are able to earn a living wage will be more likely to be motivated and, as before, they are more likely to stick around, reducing hiring costs in the future. With more money coming into their pockets, your staff are also more likely to be busy, engaged, and aiming to offer the best service that they can to your company.
Shifts in the Labour Market
This was highlighted earlier, but rather than being a trickle-down effect, it is more like a shoving-up effect!
Businesses that are already paying their staff more than minimum wage are likely to push their lower-end wages up, to keep a competitive edge in the hiring and employment market. However, this may mean that other businesses attempt to do the same, leading to a large-scale reduction in lower payment costs. Businesses will need to adjust the entire pay scale, to keep up with internal equity and to boost morale.
Higher Customer Experience Expectations
Going back to the part where businesses had to raise the prices of their goods and services, the customers may then expect a better customer experience. This is more so in businesses like restaurants, salons, and beauty parlours in general. Therefore, a secondary knock-on effect for your staff will be the need to provide a better experience for your customers, in order to justify the higher prices they are paying.
