Concerns from NI businesses as national living wage of £7.20 brought in

Ryan Abraham stole �640 from the Cancer Focus NI shop
Ryan Abraham stole �640 from the Cancer Focus NI shop

Millions of workers will receive a pay rise on Friday when the new national living wage comes into force.

Unions welcomed the £7.20 hourly rate for adults – increasing by 50p from £6.70 – but said it was not fair that younger workers were missing out, while business groups warned that firms’ paybills will “ratchet up”.

The Government’s aim is to increase the rate to £9 an hour by 2020, which would affect an estimated nine million workers.

But the hospitality sector across Northern Ireland has expressed concern about what it claims is “the unintended effect” of the move.

Colin Neill, chief executive of Hospitality Ulster, said: “We are a people industry and want to see those working in the sector benefit.

“We want to see our staff earn more, but by forcing a new national living wage upon the sector at this time will have an unintended consequence as employers will have to potentially cut staff and try to allocate an already stretched income even further.”

Small businesses also claim they will struggle to afford the national living wage.

Northern Ireland Independent Retail Trade Association chief executive Glyn Roberts said: “Small traders are facing a perfect storm of business costs with the rates revaluation, the national living wage and auto enrolment pensions.

“In principle, NIIRTA is not opposed to the national living wage, but the Chancellor needs to give small traders greater tax relief to alleviate the big jump in their wages bills.”

Owen Smith, shadow work and pensions secretary, said: “It’s a typically cruel sleight of hand from the Tories to introduce their version of the living wage with one hand, while taking five times as much in cuts to Universal Credit and Tax Credits with the other.

“While this higher minimum wage for the over-25s is welcome, it will feel like an act of deception for the two million families set to lose £1,600 a year through cuts to in-work support.”

TUC general secretary Frances O’Grady said: “Britain desperately needs a pay rise, and this increase is good news for those aged 25 or older.

“But the Government must ensure that younger workers are not left behind. 21-24-year-olds will not be seeing an increase tomorrow. This is not fair. Future wage increases must narrow the pay gap between old and young.”

The Government said the new rate will mean a £900 cash increase for a full-time worker on the current national minimum wage.

Chancellor George Osborne said: “The national living wage will play a central role in moving Britain to a higher wage, lower tax, lower welfare economy.

“It will also mark the end of the gender pay gap for some of our lowest paid and hardest working people.”