More than half of employers in the UK support the idea of increasing minimum wage but are urging the government to help businesses adapt to a higher wage floor, according to a new study.

The report, conducted by Learning and Work Institute and Carnegie UK Trust, found that employers do not believe higher minimum wages would have a negative impact on their own business, with 54% saying it would boost productivity in the UK. Just 9% of those surveyed agree with the government's plan to increase national living wage to two-third of median income by 2024.

Unsurprisingly, there was greater concern over the policy among employers that would be most impacted by an increase in minimum wage, particularly in sectors hit hardest by the Covid-19 pandemic. Over half (55%) of employers with higher levels of low pay said the policy would have a negative impact on their business, nearly double the number for all employers (29%).

While half of businesses said they would not need to do anything to respond to a higher minimum wage, some said they would have to make changes which could have implications for consumers and workers., including:

  • passing costs onto consumers (22%)
  • reduced recruitment (15)
  • increase in temporary or flexible contracts (10%)
  • reduced staff benefits (10%)
Most employers believe additional government support would be necessary to help employers manage an increase in the minimum wage. The most popular measure was additional help to invest in skills and training (supported by 37% of employers) followed by a temporary reduction in national insurance contributions (33%). Just one in six (17%) said government should not provide any support to employers. Joe Dromey, deputy director for research and development at Learning and Work Institute, said: “Increasing the minimum wage could eradicate low pay, and help to tackle in-work poverty. Our research has shown that not only is a higher minimum wage popular among workers – it is supported by most employers too. “The government can still deliver on their commitment to increase the minimum wage. But with higher unemployment as a result of the coronavirus crisis, we need to ensure that employers are supported to adapt.”Douglas White, head of advocacy at the Carnegie UK Trust, said: "That most employers support a higher minimum wage is encouraging: even before the onset of the pandemic, there were too many workers struggling on low pay. The economic challenges caused by COVID-19 means it is even more important that future decisions around the minimum wage are ambitious in delivering better pay for low paid workers, while recognising the real challenges that many businesses are experiencing and providing them with essential support."We hope the ideas put forward in our employers’ survey are a helpful starting point for a dialogue about how the government can pursue its ambition to raise the wage floor without endangering job quality or employment."