Commenting on the Chancellor, George Osborne’s comments on increasing the National Minimum Wage, Alexander Jackman, Head of Policy at the Forum of Private Business, said:
“The Forum of Private Business has been opposed to increases in the National Minimum Wage until the UK has seen a sustained recovery and businesses are in a position to afford it. We have not yet reached that point. With many companies not yet profitable enough to service their own debts the last thing we need is a huge, inflation-busting rise in the Minimum Wage, which will cost jobs in some sectors. We are clear that efforts to tackle the cost of living should not increase the costs of doing business.
“Whilst it is true to say that the NMW has lost real terms value since 2010, that ignores the wider context of the huge over inflationary growth since its creation in 1997. The recent lower increases are helping to recalibrate the NMW to a more appropriate level. Equally, the independent Low Pay Commission, which has the confidence of employer and employee bodies, should be left to make the final decision as political intervention would be damaging to the process.”
“Government should be mindful of the multiplier effect of raising the Minimum Wage. Not only does it cause wage inflation higher up, but it also means an increase in the cost of other employment benefits offered, such as pensions. A 50p rise in the NMW may sound innocuous, but to a business employing 9 members of staff, it equates to an extra £9,000 per year before any pensions or employer benefits are taken into account. Any proposals looking to offset a rise in the NMW for businesses must take such factors into account.”