A lot has been written and spoken about UK Government’s decision, effective recently on 5thApril 2025, to increase the National Living Wage, the Employer NI rate and review the thresholds for Employer NI. There are variables, but in short this summarises as an overall 10% increase to the cost of employing a Living Wage employee on a 40hr week. These changes, while aimed at improving worker welfare, can significantly impact your bottom line. Some sectors will feel the strain of this more than others, and it is certainly more challenging in certain sectors to mitigate – a person is needed to run a bar, regardless of the number of customers buying drinks, for example.
However, in many of the sectors Libra customers operate in, there are things that businesses can do, as ever, to mitigate rising costs of operating, keep profits up, and keep employees motivated. It’s important that you choose the solution that’s right for your business.
You could utilise:
Optimising labour to meet service and volume demands safely is one of the most effective ways to manage rising costs, particularly in complex, variable environments like food manufacturing. Where flexible labour is in play, having systems and processes to support smarter labour decision making can unlock significant savings.
Taking into account all fixed, stepped and variable aspects of production, considering information from a variety of sources, requires plate-spinning and problem-solving skills that even the most experienced and effective planners can benefit from some help with.
Decision making can often be risk adverse leading to the labour profile always carrying a little excess compared to the trend at play.
Libra have successfully installed and embedded data-driven labour planning tools and processes in a wide range of manufacturing sites with significant payback – now more than ever businesses need to ensure that their labour requirements are met optimally to remain competitive.
A Libra project with Labour Planning
One of the most effective ways to manage rising employment costs is to invest in the people you already have. Rather than defaulting to recruitment at higher wage levels, many businesses are finding success in upskilling their existing teams to take on more valuable roles. This not only reduces the need to hire but also strengthens employee engagement and loyalty.
We’ve supported businesses implement practical strategies such as:
These are all things businesses can put into place internally, they can reduce employee uncertainty and turnover (which is expensive!) and boosts morale and productivity without necessarily increasing pay, often more cost-effective and impactful than chasing external talent.
It’s not just wages that are going up. Rising costs are affecting most areas of operation, which may make this a good time to revisit supplier arrangements. Reviewing contracts, consolidating vendors, and exploring alternative sourcing options to drive down expenses elsewhere in the business is something we often help our clients with.
Even small adjustments to supplier terms or buying patterns can ease pressure on margins. Many businesses already have opportunities in their supply chains that could be better optimised and now could be a good time to explore them as a way to counteract some of the effect of the recent national policy changes.
Automation doesn’t mean replacing people, it means freeing up your team from repetitive tasks so they can focus on what matters most (value-adding tasks). We can audit your systems and processes and recommend tools or integrations that streamline operations and reduce administrative burden. This can lead to both cost savings and increased job satisfaction, as employees are freed up to focus on more engaging, productive tasks.
National living wage and NI may be the latest changes, but they will never be the last. Whether it’s changes in policy or changes within your business, we can help you run “what if” scenarios around order increases, site moves, or other cost pressures, so you’re always a step ahead. This includes modelling cash flow, profitability impacts, and investment options.
Cost increases like this often prompt broader questions about how the business is structured and where long-term value can be found. For many leadership teams, this is an opportunity to step back and assess whether the current way of working still serves the future goals of the business.
Following success with more targeted solutions we are often asked to assist with the bigger picture of a business to ensure sustainability of strategy, structure and solutions, both made now, and into the future. Major shifts, even government-imposed ones, often spark internal change. We can support your leadership team with tailored coaching and change management strategies to guide your business through uncertainty with confidence as well as helping craft long-term business strategy plans like we did recently with Boughey for example:
We understand that change can be challenging, but it also presents an opportunity to rethink, restructure, and come out stronger. Our team is dedicated to supporting clients through changes such as these to ensure businesses continue to thrive. If you're unsure of your next steps or just need a sounding board, we're here to help.
