You are here: Home - Saving & Banking - News -

1.7m self-employed workers to miss out on new National Living Wage

0
Written by:
21/03/2016
More than one million workers will continue to be paid below the National Living Wage (NLW) when it comes into force in April because it does not cover the self-employed, a think-tank has warned.

The Social Market Foundation (SMF) said 1.73 million people will not benefit from the higher NLW. By 2020, the figure is expected to be 1.88 million.

The current national minimum wage is £6.50 an hour but the new living wage, coming into effect from April for people over 25, is £7.20 an hour.

The SMF report – funded by independent charity Trust for London – said when the new higher NLW comes in, there will be an added incentive for firms to contract out services to self-employed people, as self-employed workers are not covered by the NLW.

Self-employment is a growing part of the employment landscape. It now accounts for over 1 in 7 of workers in the UK, a proportion that has grown by a quarter since 2000.

London’s self-employed

London has the highest rate of self-employment of all UK regions, with the self-employed accounting for 18% of all workers. Growth in self-employment in London was responsible for much of the jobs recovery after the last recession, the SMF said.

Demographics of self-employment

Growth in self-employment has been particularly stark among older people, according to the report. This may potentially reflect changes to work and retirement patterns, with older people choosing to stay in work for longer.

Report author, SMF chief economist Nida Broughton, said: “The government has focussed its efforts on tackling low pay among employees. But in doing so, it is further sharpening the divide between employee and self-employed. Policies such as the National Living Wage make it artificially more attractive for firms to engage contractors rather than employees, and ignore a large section of low paid workers. Policymakers need to adapt to a world that is moving away from the traditional employer-employee model of working.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • @YourMoneyUK All you need to know about the latest Current Account Switching winners and losers - hats off to Starl… https://t.co/fAyHhplpoP
  • RT @WeareJust_PR: Many people struggling to make ends meet may not realise they are entitled to financial help or find the system too confu…
  • RT @WeareJust_PR: Many people struggling to make ends meet may not realise they are entitled to financial help or find the system too confu…

Read previous post:
stamp duty
‘Will I have to pay the new higher rate of stamp duty?’

Dear YourMoney.com, I have recently got married and want to buy a house with my husband. I own a flat,...

Close