According to the Financial Times, economists are split when it comes to the value of the new British National Living Wage (NLW).

The publication asked 70 economists whether they believed the recently established living wage will do “more harm than good” or “more good than harm”. 31 economists (less than half of the total) positioned themselves firmly in one camp or the other, whilst the majority remain on the fence over one of the most important economic policies of this government.

The arguments for the living wage centred around three far-reaching claims: the need for fairness in the British society; increased productivity brought on by the higher wage; and Britain’s ability to afford it.

Some economists criticise the country’s “pervasive inequality”, which has exponentially grown in the past decades in spite of a growing economy. They remark that most of the gains from the latter are indelibly passed on to the top 10 per cent.

The arguments for the new living wage, however, go far beyond a “more human face of capitalism”, as Professor de Grauwe from the LSE described them. According to Vicky Pryce from the Centre for Economics and Business Research, higher wages encourage greater productivity in the service sector (Britain’s biggest economic sector) with “no real evidence of negative effects on business overall”.

Those against the NLW predict that higher wages will inevitably lead to job losses, particularly in the north of the country, where productivity is lower in general, and employers do not have the profit margins necessary to boost employees’ wages without incurring in losses.

Others point to the poor record of living wages in tackling poverty, when compared to government benefits. Stephen Wright from Birkbeck University notes that, “A single living wage, built up from consumption needs, is not a logical construct: if it had any basis at all it should be a set of living wages, for different household types”.

Finally, those against the NLW emphasise its arbitrary amount, which has not been backed by any studies, and is far higher than that recommended by most experts. An oversight which, according to some, will inevitably lead to job losses.

Sourcingfocus previously reported on the issue of the NLW. The Local Government Association (LGA) has found that local authorities in England and Wales will have to find more than £1 billion by 2020 to pay for the new national living wage. On the other hand, big outsourcers such as Mitie, Serco and G4S have publicly welcomed the NLW, which will force all UK-based employers to pay over-25s at least £7.20 an hour.

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