UK companies are hiring less staff due to the National Living Wage, a new report has concluded.
The higher minimum wage was introduced on 1 April and means workers aged 25 and above must be paid at least £7.20 an hour, which equates to a pay rise for 1.3 million workers this year, according to the Office for Budget Responsibility.
But the move, announced by chancellor George Osborne in last year’s Budget, triggered warnings that employers might respond by hiring less staff in order to rein in their wage bill.
Jobs website Indeed found there was a nine per cent drop in job vacancies in April, representing a 12 per cent decline on the number of openings available at the start of the year, according to its latest monthly report.
The decline in recruitment began in March and accelerated in April, leading the report to conclude that employers were being more cautious about expanding their workforces due to the National Living Wage, combined with uncertainty around the outcome of the EU referendum vote next month.
Indeed’s report, which tracks levels of recruitment in 13 sectors, found that only one – hospitality – saw an increase in job listings in April, which it said was likely to have been boosted by seasonal factors.
Financial services and banking job listings fell by 15 per cent month-on-month, while human resources job vacancies slumped by 18 per cent.
Unsurprisingly, the report found that workers in the north east of England benefited most from the introduction of the National Living Wage.
Six per cent of jobs advertised in the region during the first quarter of 2016 paid less than the new minimum wage, compared with just 2.2 per cent of jobs listed in London and the South East during the same period.
Other areas where workers benefited the most were Northern Ireland (5.9 per cent), Wales (5.3 per cent) and Scotland (4.8 per cent).
“The introduction of the National Living Wage has already proved divisive, and our findings will fire the debate further,” said Mariano Mamertino, economist at Indeed.
“While thousands of the UK’s lowest paid workers received a welcome boost to their April pay packet, the benefits have inevitably been concentrated in regions with higher numbers of poorly paid jobs – like North East England, Northern Ireland and Wales.
“Yet even by marginally eroding employers’ appetite to hire more staff, the policy may have unwittingly made life somewhat harder for some jobseekers. Job vacancies in 12 of the 13 sectors tracked by Indeed fell in April, accelerating a trend that began in March following the announcement of the EU referendum.
“The combination of business uncertainty about the potential impact of a Brexit, the slowdown of the economy amid global economic headwinds and a sudden increase in the wage bill for many firms has triggered a sharp cooling in the jobs market.”