GLA Conservatives Say London Living Wage Could Cost £612m

BethPH
By BethPH Last edited 41 months ago
GLA Conservatives Say London Living Wage Could Cost £612m

city hallWorkers on the London Living Wage (LLW) got a pay rise earlier this month when the Mayor announced an increase to £9.15, but the GLA Conservatives say it could cost the capital's businesses £611.8m.

Using Office for National Statistics data, the party claims in a press release that the figure equates to 32,287 hospitality jobs, and calls for tax cuts instead of a compulsory minimum wage. GLA Conservative AM Tony Arbour, said:

“We need to think practically about how to get more Londoners on the Living Wage. It’s an ideal win-win situation for business, employees and the public purse. It puts more cash into people’s pockets and improves working conditions. But forcing firms to sign up to this, especially start-ups and small businesses - such as B&Bs, restaurants and coffee shops – will only hurt them and may even put them out of business. What we need instead are common-sense measures, such as tax cuts, designed to ease the burden on small business whilst boosting pay for employees."

Mr Arbour has also called on the government to cut VAT and offer business rate relief for small companies who sign up for the LLW. With just 429 companies in the capital paying the LLW, it's clear that something needs to be done to encourage employers to pay their workers a salary which allows them to live and work in London. Could tax breaks for smaller companies be that thing?

It's a tough economic climate for everyone (unless you're an estate agent) and workers are basically caught in the same trap as their small business employers. Increasing the LLW puts some much-needed cash into people's pockets but it won't do them or the benefit bill much good if their employer then can't afford to pay them. Earlier this year, the Living Wage Commission rejected calls for a compulsory LLW, and despite the clear link between low pay and a rocketing benefits bill, the government says it's up to employers.

With the 2015 general election fast approaching and the Conservatives and Labour swapping places on a near-daily basis in the polls, do we think it's likely that chancellor George Osborne will want to win some business owners over with a tax cut?

Photo by Umbreen Hafeez in the Londonist Flickr pool.

Last Updated 19 November 2014

Mitch Edgeworth

"What we need instead are common-sense measures, such as tax cuts, designed to ease the burden on small business."

Yes, and I'm sure those extra profits will be clearly reflected in employees' wages. Why is Londonist parroting this press release drivel?

Andrew Boff

Not quite what we said. We enthusiastically support the London Living Wage but making it compulsory would cost jobs. The voluntary scheme has an increasing number of companies signing up to it when they can.

Chris

How about a practical measure, like the GLA requiring all its contractors and suppliers to sign up to the London Living wage?

Mark

The press release is entirely misleading. It's a gross error to assume that the pool of money available to employees is completely constant and that any increase in minimum wage would necessitate an equivalent number of people to be made redundant. Can you really credibly argue that every single London employer not offering the LLW is currently operating on 0% margins and would therefore go to the wall if the minimum wage was increased? Of course not.

There is a growing body of research that shows that increases in minimum wage has a small-to-negligible impact on employment. A great summary of research is at http://www.theguardian.com/com....

How about evidence-based policy for a change?