CBI calls for "modest rise" in Minimum Wage

Small Business News - 8th October 2007

The Confederation of Business Industry (CBI) stated yesterday that there needs only to be a "modest rise" in the UK's national minimum wage next year.

After the Minimum Wage rate increase on 1st October, Britain's minimum wage has become the third highest in the world after France & Australia. Britain's wage rise is higher than any other OECD country when the same-period productivity gains are taken into account.

Last Monday's increase to £5.52 an hour has meant that the minimum wage has risen by 53% since its introduction in 1999. By comparison average earnings have grown by just 38.8%. A million British workers are estimated to have received a pay increase last week.

The CBI has said that although the low wage rate has achieved its aim of establishing a good basis for lower paid workers there is a potential negative impact on business competitiveness.

By being forced to increase the wages of lower paid workers some companies are struggling to take on new staff, invest in their business, or reward other staff for good performance or in their career development.

The business sectors particularly affected by minimum wage increases are agriculture & farming, catering & hospitality, food manufacturing, hairdressing and the textile industries.

The CBI point out that in addition to increasing low pay the recent global credit squeeze with interest rate rises are loading further costs onto employers.

Even the Low Pay Commission itself, which advises the goverment on the minimum wage, has identified that next year there needs to be a "more cautious approach" to low pay increases.