Business groups warn Labour on low pay plans

Kate McCann
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Leading business organisations have warned that Labour’s minimum wage proposal risks turning the issue of low pay into a political football and threatening the economic recovery.

The Federation of Small Business, Confederation of British Industry (CBI) and the British Chambers of Commerce yesterday all urged Labour not to use the minimum wage to score political points, or risk leaving companies uncertain about the future staffing costs they face.

Labour leader Ed Miliband yesterday said his party would increase the minimum wage to £8 per hour in the next parliament if he is elected Prime Minister.

However, deputy director general of the CBI Katja Hall said: “Raising wages in this way would put serious strain on businesses, particularly hard-pressed smaller firms with tight margins, which would end up employing fewer people.”

Echoing the CBI, John Allan, national chairman of the FSB added: “Our concern is that setting rates according to political need means that the impact of rises on employment, inflation and growth will not be fully explored.”

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