Calls for higher National Minimum Wage are dismissed as ludicrous

CALLS for a hike in the national minimum wage were today dismissed as “ludicrous” amid warnings that any increase could put even more people out of work.

The Social Market Foundation (SMF), once dubbed Sir John Major’s favourite think-tank, will today call for a “substantial” increase in the minimum wage, which it says would boost growth.

In a report entitled Manufacturing Prosperity, the SMF argues that a “low-skill, low-cost” workforce discourages manufacturers from entering the high-value export market.

Steve Coulter, the report’s author, said: “Britain cannot hope to compete in the global marketplace on low price, low quality exports. Instead, a successful UK manufacturing revival depends upon moving into higher value markets.”

However, the Adam Smith Institute dismissed the proposals as “ludicrous”, and warned that any increase in the minimum wage would price people out of work at a time when jobs are already scarce.

Sam Bowman, head of research at the Adam Smith Institute, said: “Wage controls that price unproductive people out of work are the last thing that the unemployed need – the Social Market Foundation should be trying to learn from the mistakes of the 1970s, not repeating them.”

In October 2010, the adult national minimum wage rose by 13p to £5.93. The rate for workers aged between 18-21 jumped 9p to £4.92 while the rate for 16 and 17-year-olds rose 7p to £3.64.

Together, the changes will cost firms an extra £42m, according to the government’s own impact assessment.