Ken Mann: May you live in interesting times

And like every other week since the Brexit issue emerged as a threat, then stark reality, there has been a slew of opinion surveys and learned outpourings from expert summits offering scenarios of downside gloom and upside glee almost in equal measure. Definitive responses are in short supply.

Mrs May also has few concrete answers at this early pre-Brexit negotiations point. Two top questions centre on job security and the longer-term capability of wages to keep pace with the cost of living in the first years of the new era.

One of the aforementioned sets of data particularly caught my eye, not least for its comparative lack of coverage in major news outlets. Yet it has significance for a large number of UK employees.

Uncertainty being the interim norm in the absence of those fresh trade deals and evidence of continuing levels of investment in UK industry sectors and infrastructure, its statistical crunching baldly surmises that the value in real terms of the National Living Wage (NLW) could be reduced by up to 40p an hour by 2020 as employers wrestle with solutions to their own cost conundrums.

The survey of employers was commissioned by social research analysis charity Resolution Foundation. Published on Monday, it involved 500 telephone interviews with people carrying senior financial job titles and was conducted by respected specialists Ipsos MORI.

At its essence is the means adopted by employers in accommodating NLW, mainly achieved by raising prices or reducing profits rather than cutting jobs.

That runs contrary to fears before full introduction of NLW legislation on April 1, so viewing the jobs market in isolation, it is better news than expected. However the flip side of the coin presents a potentially less palatable forecast for wages.

More employers will have to look at productivity-enhancing measures in the coming four to five years, typically a stubborn challenge to crack in the UK. Adjustments will be necessary to deal with Brexit fallout prior to any upturn in confidence as Britain strikes global deals, particularly the need for an early and positive arrangement with the EU bloc.

Looking at the NLW impact so far, while remembering the survey was completed before the announcement that the UK was cancelling its EU membership, the survey found around a third (35 per cent) of businesses saying the NLW has increased their wage bill this year, though only six per cent said it had to "a large extent".

A further 16 per cent of firms expect the NLW to increase their wage bill at some point in the future. Of those firms affected by the NLW, the most popular short-term action taken to counter balance has been to increase prices (36 per cent), followed by accepting lower profits (29 per cent).

One in seven firms have apparently already invested more in training (15 per cent), and that one in eight (12 per cent) firms report having invested more in technology. The Foundation picked out those figures as good omens. It says that making such productivity-enhancing approaches a more common response to the NLW will help to maintain the success of the policy while simultaneously helping tackle the UK’s wider productivity problems.

There is, according to Resolution Foundation’s work, little evidence of more negative responses to the NLW. About one in seven firms (14 per cent) whose wage bill has increased say they have used fewer workers, offered fewer hours to staff or slowed recruitment.

Just one in 12 (eight per cent) say they have reduced aspects of the reward package, such as paid breaks or overtime.

Turning to the Brexit outcome, unsurprisingly the Foundation agrees it is likely to have a major impact on segments of the labour market in the coming years.

It notes "….sectors such as food manufacturing and domestic services, which rely heavily on EU migrant labour and have a high proportion of staff affected by the NLW, are likely to face major changes in how they recruit and pay staff, and operate their business."

Increased uncertainty about the outlook for earnings provides a darker chapter in the future script for pay. It’s simply a corollary of NLW being set as a proportion of typical worker earnings. The Foundation’s analysis presents a picture of weaker real wage growth driven by higher inflation in the wake of Brexit, potentially reducing the current projected real value of the NLW as the next decade begins.

Nevertheless the case for the NLW remains economically and morally strong.

It has delivered a pay boost to millions of workers with clear knock-on social benefits and a step towards the wider higher income economy the still targets.

I admit some surprise, and delight, that evidence of workers seeing their hours cut or losing their jobs has been relatively limited.

Be in no doubt that the UK’s own likely terms and conditions, immediately post Brexit, is going to reshape the landscape occupied by lower-paying sectors. What precise shape it takes is still open to conjecture.

But while Mrs May’s promise to make UK Government legislative influence work for the widest swathe of the population has resonance, external economic factors could undo good intentions.

The expertise of the independent Low Pay Commission remains vital. Her Cabinet would be well advised to listen carefully to its counsel.