Business

Ex-Sainsbury's boss Justin King slams National Living Wage

Justin King Image copyright Getty Images

The National Living Wage will "destroy jobs", former Sainsbury's chief executive Justin King has claimed.

Introducing a nationwide rate is "ludicrous", Mr King told BBC series The New Workplace.

The living wage will come into force in April 2016 and set a new minimum pay level of £7.20 an hour for workers aged 25 and over.

A Department for Business spokeswoman said it would ensure "work pays" and reduce reliance on benefits.

She added: "The new National Living Wage is an essential part of moving to a higher wage, lower tax, lower welfare society."

'Not justified'

The rate will be 50p an hour higher than the National Minimum Wage fixed by the Low Pay Commission.

By 2020, Mr King argued, the Living Wage could be "10% or 15% higher" than the minimum wage equivalent.

"The Low Pay Commission has done tremendous work on the minimum wage for many years," Mr King said.

But the living wage "is not economically justified", he added.

Employers will seek to make their workforces more productive and that will lead to fewer jobs, he argued.

"You can't talk about productivity without recognising that one of the consequences of productivity is less people producing the same output", Mr King said.

"Companies will invest in more productivity and as a consequence there will be less jobs."

'Real risk'

His comments come in the same week that Sainsbury's announced that, from 30 August, its 137,000 shop-floor staff, including workers under 25, will see their standard rate of pay rise 4% to £7.36 an hour.

Frances O'Grady, the general secretary of the TUC, told The New Workplace she was concerned employers may replace older staff because the National Living Wage only applies to workers aged 25 or over.

"The real risk here is we see employers who want to keep their labour costs low substituting in young, lower-paid workers for adult workers who they would have to pay more," she said.

Earlier this week, McDonald's UK chief executive Paul Pomroy told the BBC that his company was "working through" what the impact of paying the living wage was going to be.

You can hear the full interview on The New Workplace at 12.04BST on Saturday, 29 August.

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