National living wage: Firms report impact on hiring

The Government has defended the national living wage as a survey of businesses finds damaging effects on workers.

The British Chambers of Commerce (BCC) said a third of the 1,600 firms it questioned reported increases to their wage bills since the legislation took effect earlier this year.

It meant all UK workers aged 25 or over had to be paid at least £7.20 an hour from April.

It was met with grumblings from some sectors, especially retail and hospitality which warned of an impact on job growth as well as profits.

The independent Office for Budget Reponsibility said ahead of its introduction that the policy could lead to more than 100,000 direct job losses .

The BCC said its survey showed that of the 34% of the businesses paying higher wages, a quarter of them had already slashed recruitment.

A third of those affected also warned of a further dent to job growth once the wage reaches £9 per hour, due by 2020.

Others spoke of changes to staff hours, benefits and the potential to cover the cost by raising their own prices.

The BCC said the findings in its report showed the Government must take an "evidence-based approach" to setting the wage.

Its head of education and skills, Marcus Mason, said: "The rate should be set by the Low Pay Commission and be determined by the state of the economy, weighing up the various pressures businesses face."

A Department for Business, Energy & Industrial Strategy spokesman said: "The Government is committed to building an economy that works for all and the national living wage is doing just that.

"We are making sure this works for employees as well as businesses, and will continue to back small firms by providing an environment in which they can thrive."