Northern Ireland is falling behind other UK regions in adopting the Real Living Wage, even though it has a significant number of low-paid workers.
The Real Living Wage, calculated by the Resolution Foundation, is set at £12 an hour outside London. Despite this voluntary standard, fewer than 100 businesses in Northern Ireland are accredited, compared to over 15,000 across the UK.
Current wage structure in the UK
The UK’s wage structure includes several tiers.
The national minimum wage is legally enforceable and varies by age, with rates of £6.40 an hour for workers under 18 and apprentices, and £8.60 an hour for those aged 18-20.
The national living wage, which is also statutory, stands at £11.44 an hour for workers aged 21 and over.
Northern Ireland’s slow progress
Mary McManus, Regional Manager for Living Wage NI, expressed concern over Northern Ireland’s slow adoption of the Real Living Wage.
She highlighted that Scotland, despite having a population three times larger, boasts 40 times the number of accredited employers.
Wales has nearly 600 accredited employers. McManus attributes Northern Ireland’s lag to its high rate of workers earning below the Real Living Wage, one of the highest in the UK.
Official figures reveal that 15.6% of employee jobs in Northern Ireland paid below the Real Living Wage last year, significantly higher than the UK average of 12.9%.
This translates to approximately 190,000 workers earning below the threshold.
The constituencies with the highest proportions of low-wage workers include Belfast West, Foyle, Fermanagh and South Tyrone, and East Londonderry, where one in five workers earn below the threshold.
Women and part-time workers are disproportionately affected.
Labour government’s proposal for national minimum wage
The UK government’s plans to increase the national minimum wage and lower the eligibility age could impact Northern Ireland’s wage landscape.
The Labour government aims to introduce a living wage that considers living costs and reduces the eligible age from 21 to 18.
This change could benefit an additional one million workers and provide a 33% uplift for those earning the minimum wage for 18-20-year-olds.
However, it may pose challenges for businesses, especially in high-labour-cost industries such as hospitality and retail.
Experts caution that significant increases in the minimum wage could affect inflation and unemployment.
A further 7%-10% increase in the minimum wage, as predicted, could exacerbate these issues.
Higher wage costs may slow economic growth and limit interest rate cuts by the Bank of England.
The Labour government’s proposal to align the Minimum Wage with living costs represents a significant policy shift.
For the first time, officials will consider living expenses when setting wage levels.
This reform aims to address disparities between wages for younger and older workers.
The Low Pay Commission will be tasked with incorporating these factors into their recommendations.
While higher wages could improve living standards and boost consumer spending, they might also increase operational costs for businesses, leading to higher prices for goods and services.
Industries with thin profit margins, such as hospitality and retail, may struggle to absorb these costs without reducing staff or cutting back on services.
This article first appeared on Invezz.com
