Impact Of The National Living Wage

Introducing the national living wage will have many economic implications on the employers. Moving from the minimum wage of £7.20 hourly to £8.45 for workers outside London and £9.75 for workers within London will definitely requires some actions from the firms. This essay will illustrate the impact of the national living wage that will have towards the employers. Most of them will have higher costs especially small firms where their business will be in high risk of bankruptcy. Higher costs mean that firms have to give up on something in order not to being driven out of the economy. On the other hand, some firms will benefit from the new minimum wage for their employees. Higher wage means an increase in productivity which will lead to higher profits to the firm.
As per (Fsb.org.uk, 2016), a research found that 38% of small businesses will have a negative impact on the new national minimum wage. The main cause is the rise in the costs of the firms. Higher minimum wage means higher wages for employees, thus firms will be able to afford the wage bills of their workers. Most small companies are in high risk of bankruptcy, being unable to pay the returns to their employees. The firms will need to make greater profits in order to afford the new wages of their employees. Any company that will not pay the wage bill of their employees will have some