The living wage can potentially benefit all of us.
Byline: NIGEL MILLS
FOR many who watched the second Budget of the year, the announcement of the living wage was the defining moment of Chancellor George Osborne's speech.
With the focus on cuts to the welfare budget, nobody saw it coming. Some called it a disaster, others a gamble.
Since July 8, there has been a lot of 'chewing the fat' over what it means to employers and employees and opinions have been divided. It is hard to argue against the benefits for those who will find themselves better paid, especially here in the North East, where the living wage stands at PS7.85 per hour, but some businesses have argued that it will prove dangerously costly and restrict employment. However, for entrepreneurs, it presents great opportunities. Entrepreneurs thrive on challenge, because it gets their creativity and problem-solving minds working, and this is when good things happen. In the North East, there is a strong entrepreneurial spirit, so I believe our region will benefit from the changes if we can enhance that character.
For the service industry, where professional firms support clients with change management and productivity, there is an opportunity for growth as they reach out to help businesses to mitigate the effects of the cost increase and balance the other measures announced by the Chancellor. If they can help their clients to deliver increases in productivity and efficiency, it will inevitably lead to growth for their own organisations and their customers.'.
For existing employers, it is a chance to re-engage with their workforce and to look at how they run their business. By addressing the increase in costs, it is a great opportunity to revisit their business plans and models and look at what this gives them the opportunity to do for both their employees and their customers, instigating change for the benefit of all.
Arguably, for new businesses starting life, while there is inevitably a need to keep costs down, the new living wage can be factored into planning from the beginning. As all net new jobs are created by businesses in their first five years, this is important to this region's efforts to lift itself from the bottom of the employment tables.
It is also a great opportunity for existing businesses looking to scale up to plan for the future.
According to figures from the independent think tank the Resolution Foundation, released in October 2014, there are around 1.2m people currently earning the legal minimum wage, up from little more than 600,000 in 1999.
A large proportion of these people are here in the North East and in announcing the new living wage, Mr Osborne has set out both a challenge and an opportunity for businesses to make a huge difference to the lives of these individuals, and to their own companies.
Those companies that forget about the future direction of their customers and the market they operate in risk losing their competitive edge. The living wage can be a catalyst to re-engage with both workforces and customers to once again glimpse that future and plan for further success.
Nigel Mills is chairman of the Entrepreneurs' Forum