National Living Wage Review April 2021 - Impact Recruitment

National Living Wage Review
April 2021

Welcome                   Foreword by Matthew Hopson, Impact Sales Manager
                          As part of our link to Northamptonshire based businesses, we are using our platform to inform
                          on the current changes to National Living Wage. Despite a turbulent year the Chancellor
“We have not only         announced in the Spending Review last November, the National Living Wage rate will increase
                          2.2% from £8.72 to £8.91 next month – an annual pay rise of £345 for a full-time employee on
received a guide on       this rate. The NLW is currently only applied to those aged 25 and over.

average pay rates pre     With attraction and retention key topics now we have exited the EU, we have received more
                          consultation than ever to ensure our client’s attract the top talent in the area and retain these
and post NLW increase,    employee’s within their business. Whilst pay remains an important part of this process,
                          employee engagement, culture and environment are proving more important than ever.

but we have identified    Our 2021 National Living Wage Review has a diverse range of subject data which stems from
                          Distribution, Logistics, Manufacturing and Production environments within the
motivations surrounding   Northamptonshire area.

choices…”                 We have not only received a guide on average pay rates pre and post NLW increase, but we
                          have identified motivations surrounding choices and the potential impact for each individual
                          employer.

                          We will be in touch to discuss the findings of our report, advising on strategy and support
                          around your talent management process.

                          Take care and stay safe.

                          Matthew

Q1. Basic pay rate for Operatives pre AWR
Of our 54 respondents, we can see
that just under 50% (26) are paying
around the current NLW.

It is positive to see that just over half
of respondents (28) already pay
above the NLW as a basic rate.

Q2. Basic pay rate for Operatives post AWR
As you can see, the graph shows
that there is not much planned
movement between the rates pre
and post the NLW change.

Although there is a slight change
from one or two respondents –
this is telling us that the majority
of respondents are sticking close
to their post AWR rates and not
making any drastic changes.

Q3a. Do you offer a shift premium?
A shift premium is an excellent
way to incentivise applicants to
work the shifts that are harder to
fill.

83% of our respondents have said
they do not offer shift premiums,
so what do the other 17% offer?

Q3b. What is the premium rate you offer?
We asked respondents to go into
more detail about the shift
premiums they offer and the
majority of them were a
percentage on top of the basic
wage.

Ranging from 8% - 33% there was
a variety of different shift
premiums that changed depending
on the shift times, with the higher
percentage being offered on late
and night shifts.
Also included was a £1 addition to
basic pay for night shifts.

Q4. On April 1st 2021, what are you increasing
your pay rate to?
To get a clearer picture of what
changes were being made, we
asked for more specific pay rates.

We had 35 responses out of 54 for
this question, which means the
percentage of answers differ
slightly from the answers to
Question 1.

Interestingly, the almost all of the
respondents that skipped this
question, proceeded to answer
Question 5 as ‘Already above
NLW’.

Q5. If you are not planning to increase your pay
rate on April 1st 2021, please tell us why.
Not everyone answered this
question but we had 27 responses
which fell into three categories.
• A neutral response of N/A or
   ‘unknown’
• Financial constraints such as
   pay freezes
• Already paying above NLW

It is worth noting that a small
portion of respondents let us know
that they already introduced a pay
increase at the beginning of 2021.

Q6. Do you think not changing your pay rate
will have an impact on attraction and retention?
It is widely accepted that wages
and salary influence retention and
attraction, as well as other factors
such as culture and environment.

For those reasons we expected
the majority of respondents to
answer anything but ‘None at all’.
As you can see, it was the
opposite. When we delved further
though we found that almost each
‘None at all’ response was from an
employer who is already paying
above NLW.

Conclusions
Using the answers and
additional comments we can
sum up the general sentiments
                                    Over half of respondents intend to pay   Most respondents who aren’t            Many respondents feel that they cannot
and worries employers have in
                                    above NLW after April 1st 2021.          planning to increase their pay rate,   go above NLW because of financial
the lead up to April 1st.                                                    already pay above NLW and don’t        constraints.
                                                                             expect that to impact on attraction
                                                                             and retention.
Given the past financial year, it
is understandable that there are
many mixed feelings and
differing points of view across
our respondents.
                                    Respondents who felt that not            Most of the respondents who do not      The majority of shift premiums are on
                                    increasing the pay rate would impact     pay any shift premiums, also already    late and night shifts which are
That said, we were able to see      the most on retention and attraction,    pay above NLW.                          notoriously harder to fill than other
interesting trends and patterns     were also most likely to be making the                                           shifts.
                                    smallest increase.
across the sometimes similar,
and sometimes different,
circumstances.

Recommendations
Your business is unique and no
one understands it better than     Shift premiums work well because not all shifts are equal, some will be more popular among
you. Many businesses are           candidates, such as day shifts. Whereas night shifts come with increased health risks and isolation
affected by the same issues        so if you have issues with retention or attraction on certain shifts, adding premiums is a good way
however so these                   to improve it without spreading the cost across all shifts.
recommendations are aimed to
support a variety of situations.
                                   If you aren’t already, start calculating the cost of employee turnover to find out how much
                                   you might be losing by paying for replacement employees.
As we’ve mentioned, culture
and environment are just as
important as wages when it         Training and development is an important factor in job satisfaction. Fostering a culture of
                                   continuous improvement and giving workers the chances to upskill will inspire loyalty.
comes to employee retention
and job satisfaction. If it is
impossible for financial           Exit interviews are a great way to learn first hand why employees are leaving. Taking onboard the feedback
changes to be made, look at        from past and current workers will highlight problem areas that are affecting the environment such as out-
making employee engagement         of-date equipment or unpleasant recreation areas.
improvements.

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