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  1. ITV Report

One in four firms have 'cut recruitment' following introduction of living wage

File photo of a selection of notes and coins on a payslip. Credit: PA

One in four firms have cut recruitment following the introduction of the national living wage (NLW), a study has shown.

Of the 1,600 business leaders questioned, a third planned to scale back hiring staff if the £7.20 an hour rate for adults increases to £9 by 2020.

The survey showed others were looking to change staff hours, benefits or pay growth.

The British Chamber of Commerce (BCC) has said its research suggests a rising cost burden on many companies.

Head of education and skills at the BCC, Marcus Mason, said: "A significant number of firms have already had to re-balance their books to meet the cost, which can have a knock-on effect on recruitment or growth plans.

"Many firms would have to change their business models, by increasing prices and reducing staff, if the NLW increases to £9 per hour by 2020.

"The Government needs to take an evidence-based approach to setting the NLW.

"Further increases need to be proportionate, reflecting business uncertainty, slowing growth and high input costs, to avoid having a negative effect on employment", he added.

The Government is committed to building an economy that works for all and the national living wage is doing just that.

We are making sure this works for employees as well as businesses, and will continue to back small firms by providing an environment in which they can thrive.

– Spokesman for the Department for Business, Energy & Industrial Strategy