Nlw Advantages And Disadvantages

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National Living Wage

This essay is going to define what the National Living Wage (NLW) is and who introduced it. It is going to point out what was forecasted to happen at the time of its introduction and what it has actually happened now. The extent to which it had a positive impact on the labour market.

The National Living Wage (NLW) is an hourly rate of pay. Every year the Chancellor of the Exchequer makes the budget statement, this means he or she states the economic statement of the country. In 2015, a politician from the Conservative Party, and member of Parliament for Tatton (stood down on May 2017), George Osborne unveiled the National Living Wage. People cheered immediately after George Osborne unveils the National Living Wage which …show more content…

However, there are uncertainties regarding the wider impacts of the NLW, and there may be some negative impact on employment and hours worked. The OBR has suggested the NLW could increase unemployment levels in 2020 by somewhere in the range of 20,000 to 120,000 people.” This shows the positive forecast for the low-paid workers. However, it is also forecasted to cause an increase in unemployment.
It is important to point out that the NLW will have both, positive and negative impacts. This essay will mainly focus on employers and employees. The graph below shows that an imposition of a minimum wage would likely cause an increase in unemployment. In this case, because the NLW is higher, it is forecasted to have a negative impact on employment …show more content…

In case of the supply for labour being relatively elastic, the unemployment will be largely affected. In the other hand, when it is relatively inelastic the unemployment created is relatively small. It is important to highlight that the impact of the NLW will differ between different businesses, industries and the economy as a whole. For example minimum wage legislation amongst hairdressers might result in a high unemployment in this market. However, considering the impact in the big picture rather than just a market like the example given before, a fall in the demand for labour shouldn’t cause a big impact because labour can simply switch to another

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