Growers seek government help to meet the cost of the National Living Wage
- Credit: EDPpics 2003 (01603) 772434
Farming leaders have laid out a series of demands for government to help labour-intensive food producers cope with the financial implications of the re-branded minimum wage.
The introduction of the National Living Wage (NLW) yesterday saw the minimum hourly rate for over-25s rise from £6.70 to £7.20.
The treasury says 1.3 million workers will get a bigger pay packet under the policy, which aims to move Britain towards becoming a 'higher-wage, lower-welfare economy', as well as ending the gender pay gap for some of the lowest earners.
But the National Farmers' Union (NFU) said crops such as soft fruit, leafy salads and vegetables have an 'unusually high requirement for seasonal labour' – making the profitability of horticultural businesses highly sensitive to wage changes.
There are 35,000ha of horticultural crops across East Anglia, worth an estimated £540m to the regional economy – but the NFU says the new living wage is set to increase the cost of seasonal wages for these businesses by 35pc during the next five years. A recent report by farm business consultants Andersons suggested horticultural businesses could become unprofitable within four years.
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North Norfolk farmer Tim Papworth, pictured, a member of the NFU's horticulture and potatoes board, said: 'The NLW is going to affect every single business in a big way. There is a lot of soft fruit around here, but a lot of people also use casual labour for grading potatoes, so it is already affecting our labour costs.
'It will make us less profitable, even though potatoes is one industry where the prices have turned a corner. There will be casualties, definitely. There is not the margin at the moment to be able to pay the extra.'
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The board will ask the government to consider a wishlist of possible mitigation measures, including:
• No Employers National Insurance contributions for seasonal workers.
• A new student agricultural workers scheme, accessible to agriculture students worldwide.
• No pensions auto-enrolment requirement for seasonal workers.
• The ambition for NLW to reach 60pc of median earnings by 2020 to be pushed back into the next session of parliament, to allow time to adapt.
• More investment in cost-saving technology, automation and mechanisation, with research and development funding made more accessible to smaller businesses.
The NFU is also asking retailers to work with their suppliers and growers to discuss how the costs of NLW can be spread fairly across the supply chain.
How is the National Living Wage affecting your business? Contact firstname.lastname@example.org.