INTRODUCING the new national living wage will pose major challenges for Leeds, according to a leading thinktank.
The Resolution Foundation warned that bringing in the higher pay level will be harder in areas with a history of low pay.
In Leeds, more than a quarter of employees are expected to see a rise in their wages as a result of the change.
Only Nottingham, Sheffield and Birmingham will see a bigger share of the local workforce getting a pay boost.
The Foundation welcomed the pay increase for staff but said it would also come with major challenges for employers.
It also warned that companies might deal with the wage rise through redundancies or by narrowing the gap between those on lower pay and their managers.
Chancellor George Osborne announced the creation of the national living wage last year which will see workers aged 25 and over earn at least £7.20 an hour from this April.
The national minimum wage for those over 21 currently stands at £6.70.
Employers in the hospitality, care and retail sectors are expected to face the biggest increases in their wage bills.
Adam Corlett, economic analyst at the Resolution Foundation, said bringing in the national living wage would be “challenging” in cities where wages tend to be lower.
He said: “The new National Living Wage will have a huge impact on low pay, particularly towards the end of the parliament as it approaches £9 an hour.”
He continued: “National, local and new regional politicians must work closely with employers to ensure that the National Living Wage is a success, particularly in low paying sectors.
“It will take more than a higher wage floor to tackle Britain’s low pay problem. Expanding the reach of the voluntary living wage campaign will still deliver higher pay for thousands of workers.
“It’s also vital that employers create progression routes at work so that staff can be lifted out of low pay altogether.”
The voluntary living wage, set by the Living Wage Foundation, stands at £8.25.