Businesses warn against minimum wage rise

Kate McCann
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BUSINESS leaders have warned the government against a knee-jerk move to increase the minimum wage, rumoured to be on the cards later this year.

John Wastnage of the British Chambers of Commerce warned that current evidence would not support a large increase in the minimum wage and if introduced it could push unemployment up, as employers struggle to cope with the extra cost and lay off inefficient workers instead. “The risk is that politicians are looking at this as a way to change their image ahead of an election, we don’t think they should be making short term policy decisions based on party branding, we want politicians to make long term decisions based on what is best for the country,” he said.

Wastnage added that by 2015 pay increases were expected to rise above inflation without any intervention and that ministers should look at increasing productivity rather than artificially pumping up the market by raising the minium wage.

Business secretary Vince Cable wrote to the chairman of the Low Pay Commission (LPC) last year, asking him to report on the market conditions needed for a fast increase of the minimum wage, currently set at £6.31 for adults. A spokesperson for the LPC said the commission will report back in February.