The survey by PwC surveyed the businesses to understand how they are preparing for the introduction of the new National Living Wage.

According to the survey, those organisations which currently have a large number of employees earning below £7.20 an hour, and will therefore be affected from the first year, will typically see their wage bill rise by £2.3m in 2016 and £15m by 2020.

Of all of the employers surveyed, nearly a quarter of their workforce (23%) are currently paid less than £7.20 an hour and nearly four in ten (39%) are currently paid less than £9 an hour - the target wage by 2020.

PwC suggests that businesses should start planning on how they will implement the National Living Wage now, even if they won’t be immediately impacted in 2016. This is a chance for organisations to consider where they want to position themselves in the market and review their pay and benefit structures accordingly.

Around a third of respondents (32%) say they are planning to pass on the increased costs to customers and over a quarter (26%) say they plan to reduce their headcount due to the increased wage bills. Half of respondents say they are planning to change their pay and grading structures in response to the National Living Wage.

John Harding, employment tax partner at PwC, said: “The National Living Wage will be a great boost for millions of workers. Businesses have been given time to prepare for these changes and should be using this as an opportunity to introduce wider workforce interventions and technology to improve productivity, rather than defaulting to passing the costs on to consumers.

“The National Living Wage announcement is already changing the competitive landscape in the most impacted sectors. How organisations react to this change will set them apart for the future. Given the timetable of proposed increases, even those employers currently paying above £7.20 an hour need to be wary of complacency.

"Employers who are able to quickly adapt to these changes and embrace them are most likely to thrive as they will be best positioned to attract and retain talent.

“While many employers should be able to afford the increase to their wage bill, the disproportionate impact on sectors employing a large number of lower paid workers such as retail, transport and logistics, healthcare and hospitality and leisure can’t be ignored. Organisations must have a plan to deal with these costs, that isn’t simply passing them on to consumers or reducing headcount.”