The National Living Wage that was introduced in April 2016 could spur stronger economic growth, according to Sir Charlie Mayfield, the chairman of department store chain John Lewis Partnership.
Mayfield, who also serves as the chairman of the UK Commission for Employment and Skills, said that the National Living Wage that assures higher minimum wages of at least £7.20 ($8.85) an hour to staff aged 25 and above, could lead to more firms using automation. This, he said, could increase productivity which in turn could lead to a stronger economic growth.
"I think the national living wage will be a spur to productivity. I think that will already be happening...I do agree with one of the underlying intents of the national living wage which is to say: 'We can't afford as a country to be a low wage economy.'"
On the downside, he said that this could lead to fewer jobs. He, however, said this would be limited to certain industries.
"I think we will see automation happening faster. It would be wrong to say that the national living wage is going to create a great increase in automation in sectors like retail, but it will be a contributing factor to an acceleration of automation in some sectors and it will have impact on employment levels," he said.
He added that this threat to jobs could vary across sectors. "Different sectors will be affected differently, so the consequence of the Nissan plant in Sunderland being one of the most productive in the world is they are going to be making more cars and more jobs.
"Equally, there will be sectors and companies that are more in a remedial situation. Or indeed where the technology that is available to them has shifted so significantly that they can re-engineer in a much more dramatic way how they carry out current operations. There will be instances where that will lead to fewer jobs," he was quoted as saying by the Guardian.
Mayfield went onto say that this would however have a positive impact on jobs in the longer run. "You can't really generalise and say this is a recipe for fewer jobs across the country. I think what you can say is that over time if the country is more productive we will create more employment and higher paid employment than the alternative, which is that our competitiveness declines," he said.
It was further revealed that Mayfield's productivity council will develop tools that will allow corporate bosses to measure the productive health of their respective companies. In this regards, an app called "How good is your business really?" is expected to be launched soon. This is said to allow businesses to do a self-assessment of their productivity levels.