By Marcus Leach
News that the national minimum wage has risen has not been welcomed by many businesses and business organisations.
The government has accepted the independent Low Pay Commission’s (LPC) recommendations for this year’s adult and youth National Minimum Wage (NMW) rates.
Mike Cherry, National Policy Chairman, Federation of Small Businesses, said that in the current economic climate the rise is an unwelcome one.
“The increase in the national minimum wage is unwelcome in today’s economic climate," he said.
"We understand the Government must strike a balance between boosting consumer spending and economic growth, however they must ensure the UK's small businesses stay competitive at a time when the economy remains fragile.
“There will be businesses that operate on thin margins, who will struggle with any increase to the minimum wage. We therefore urge Government to place renewed impetus into driving down their overheads, such as business rates, energy and fuel costs, and freeing up cash-flow by ending the scourge of late payment by big companies to their suppliers.
“We have said in the past that there is a case for increasing the apprenticeship minimum wage further. This will boost the apprenticeship brand among young people and help small businesses attract the best young recruits. We believe the Low Pay Commission should look again at this next year.”
Mr Cherry's sentiments were echoed by Alex Jackman, Head of Policy at the Forum of Private Business.
“In the current business climate any additional cost is an unwelcome one. However, we appreciate that for the second year running the Government has implemented an increase in the National Minimum Wage that is below inflation, and for this restraint employers will no doubt be thankful,"
“Many of our members pay above the National Minimum Wage but we are in difficult economic times and the government has recognised that any increase in NMW has a wage inflation rate higher up the scale.
“To put the wage rise in context, at the Budget the Government announced an Employment Allowance to save all employers £2000 on their staffing costs, to be implemented from April 2014. As the increase in National Minimum Wage comes into effect this October, today’s increase will mean a business employing 9 or more full time members of staff on the minimum wage will see over half of that wiped out before it even comes in.
“Given this impact, the country categorically cannot afford the misleadingly titled ‘living wage’ in its current predicament.”
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