Engineering firms in favour of National Living Wage

The Close Brothers Business Barometer has revealed that nearly two thirds (63%) of SMEs in the engineering sector welcome the new UK National Living Wage which came into force on 1^st April 2016. The new rate of £7.20 per hour for workers aged over 25 is a rise of 50p on the current national minimum wage.

The quarterly survey of UK SME owners and senior management from a range of sectors also revealed that a fifth (20%) of SMEs in the engineering sector believe that the change to the National Living Wage will cause an increase in productivity within their business.

Commenting on the figures, Steve Gee, managing director of the Industrial Equipment Division at Close Brothers Asset Finance said: “It is encouraging to see that a substantial amount of businesses in the engineering sector are in support of the new living wage, as thousands of workers across the country stand to benefit from the initiative.”

However, despite this widespread support, nearly a fifth (18%) of businesses in the engineering sector say they will be adversely affected by the National Living Wage. To offset the increase in staff costs, over half (53%) of these firms maintain they will have to reduce their costs in other areas and a third (33%) say they require an increase in income.

Mr Gee added: “There will always be some businesses (19%) that oppose these kinds of changes because many small firms operate on tight budgets so it is understandable that they might feel even more stretched having to boost the wages of their workforce.

“While the Government is cutting taxes to help with the transition, it is important that SME bosses make sure they have the right financial support in place if money is an issue – and this could be anything from having an emergency overdraft buffer on a current account or a flexible financing facility in place.”

Close Brothers Asset Finance www.closeassetfinance.co.uk