Study claims outcomes of National Minimum Wage and increased productivity Magazine

A far-reaching study has provided what statements to be compelling evidence how the introduction on the National Minimum Wage significantly increased productivity in hundreds and hundreds of UK companies within the decade given it became law.

A team of economists and labour market specialists developed a modern analytical approach to estimate the outcome in the National Minimum Wage on productivity across Britain’s low-paying sectors, as defined by the lower Pay Commission.

The researchers believe their findings provide robust contemporary evidence that raising salaries along at the entry level from the wage spectrum causes higher productivity by incentivising workers to operate harder, smarter and a lot more cohesively. Their study suggests similar ‘wage incentive effects’ could be expected from the introduction within the National Living Wage in the UK in April 2016.

The study was conducted by academics within the University of Lincoln and Middlesex University in great britain, and Australian Catholic University. It truly is published in the British Journal of Management.

Lead author Professor Marian Rizov through the University of Lincoln said: “Our findings offer compelling evidence that increasing wages to the lowest paid workers improves productivity, and this this effect applies in companies of any size and across most low-paying sectors.

“Employees’ perception which they and their colleagues have been paid a wage corresponding to their skill and – the so-called ‘fair wage-effort hypothesis’ – features a powerful affect on productivity, alongside other wage incentive effects.

“This has important implications for businesses at any given time when wage inequality is expanding and suggests that the newest National Living Wage may be a very important step towards tackling Britain’s productivity problem.”