Employers must bolster productivity to cope with the National Living Wage, new report from CIPD suggests

Employers must become more productive in order to cope with the burden that will be brought along by the National Living Wage, a new research report from the CIPD has been able to reveal.

The research revealed that, spite two years of growth, a fifth (21%) of companies are not currently making the necessary investments in people or equipment that would boost their productivity. The CIPD’s report, Investing in Productivity, found a clear link between an organisation’s mindset and its relative productivity.

For example, a quarter of firms (25%) said that they have ‘continued to invest in equipment, technology and people and have increased their productivity significantly’ over the last two years, with over half (53%) of respondents in this group having increased expenditure on capital equipment, 43 percent increasing expenditure on learning and development (L&D) and 72 percent increasing their output in the previous 12 months.

Furthermore, 21 percent of organisations felt that their business had been ‘in survival mode for a long time and had not been able to invest in major improvements to the business’ while 19 percent said that they are ‘a leaner business now because they took cost out during the recession and the productivity of their workers has improved as a result’.

Mark Beaston, the CIPD’s chief economist, said:“We need these businesses to recognise the current opportunities for growth, innovation and investment, to raise their sights and break through their ‘ambition ceiling’. Unless they can do this, it’s questionable how many companies will be able to absorb the planned National Living Wage without an adverse impact on employment levels.”

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