Business

Job cuts 'are not the answer to new living wage'

Breda Cullen

INCREASED staff productivity and not redundancy is the best way for employers to off-set the impact of the introduction of the national living wage, which kicks in from this Friday, say human resources experts HR Team.

Hundreds of employers in Northern Ireland and throughout the UK are dreading the impact of the introduction of the minimum wage increase to £7.20, with some planning to shed staff as a direct result.

But employers should refrain from such a knee-jerk reaction and take steps to increase staff performance and productivity rather than drastically restructuring workforces, according to Derry-based HR and employment law advice specialists HR Team (www.hrteamservices.com).

Its managing partner Breda Cullen said: “Since the national living wage was announced by George Osborne last summer, employers - not least in the retail and hospitality sectors - have been worried about the consequences.

“Many employers with large numbers of staff being paid minimum wage reacted negatively by introducing large scale restructuring plans and price hikes for consumers.

“Others have taken the more positive approach of addressing staff productivity to help boost bottom lines and negate higher wage bills.

“But we would strongly recommend this approach to shouldering the burden of the increase. Proper training, effective communication and the adoption of robust management practices are all tried and tested methods of increasing productivity and turnover in organisations."

Ms Cullen said employers should view the National Living Wage introduction as a trigger to ensure that they are getting the most from their team and that efficient work practices are adopted.

"Strategically increasing productivity in the workforce may not be an instant fix but is a much more prudent long term investment than a destructive reaction to downsize workforces,” she said.

“It's vital employers are ready for this change and have the appropriate mechanisms in place in order to meet their new wage obligations and avoid penalties,” she added.

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