We will make no secret of the fact that our advertising services are particularly effective with junior roles; roles which are currently paying thousands above the current minimum wage, but within three years, will be under the minimum wage!
When discussing figures, I will use a working week of both 7.5 hour and 8 hour day, with 260 working days a year, meaning a total of 1950 and 2080 hours a year respectively. I will also be using the minimum wage for adults over 25.
The current minimum wage is £7.20 an hour, meaning an annual salary of between £14,040 and £14,976.
From April 2017, the minimum wage is increasing to £7.50 an hour, giving an annual salary of between £14,625 and £15,600 a year.
With the government aiming to have the minimum wage of £9 an hour by 2020 (a figure worked out at 60% of median earnings, so might vary), gives a salary range of £17,550 to £18,720. To put that in context, that is an increase of 25% from where we are today or an average increase of 7.7% a year for the next three years!
Will this significant increase in pay have an impact on your recruitment strategy? According to the Resolution Foundation, based on a survey of 800 employers, only 27% have made staffing changes because of the change to the minimum wage. Incidentally, smaller employers (companies with less than 50 employees) were leased affected by the changes.
What will this significant increase in wages mean for salaries of other jobs? With some junior graduate jobs currently being advertised at around £18,000 a year (which, provided the employee is under 25, is likely to be completely legal in the future). But will that level of salary be motiving enough for a graduate? Especially knowing that if they were only a few years older, they could be paid the same without their degree? With the low unemployment rate, it is very much an employee job market at the moment. You need to make your roles attractive to employees, which doesn’t necessarily mean through higher salaries; company life style is crucial for a lot millennials when choosing a job.
According to UNI stats data, the average graduate salary of £20,573, with a lower quartile of £17,568. This figure is slightly lower than that calculated by gradudate-jobs.com, where they have a range of £19,000 to £22,000.
Either way, the point which I am trying to make is that employers are going to have to consider considerably increasing their base salary levels to distinguish their graduate roles from other jobs which, historically might have been paid £5,000-£7,000 less a year; is it reasonable for graduates to still expect that salary differential?
Going back to the original question of “How will the increased minimum wage affect your recruitment strategy”, for a lot of companies, I can imagine that remuneration packages will need to be re-evaluated at all levels of the business. We all know that 7.7% salary increases for all staff a year for three year is a particularly unlikely outcome!