The setting of annual minimum wage increases is unpredictable, and greater transparency of how the rate is determined is needed, retailers have complained.
The British Retail Consortium (BRC) said that the process is erratic and appears to be an attempt to balance conflicting bids from businesses and unions.
The retailers’ organisation has responded to the findings of a report conducted by Oxford University and commissioned by the BRC, which found that the National Minimum Wage (NMW) has risen ahead of the economic indicators that ‘should be influencing it’.
The BRC commented that the process is typically ‘shrouded in mystery’ and should be replaced by an open, predictable process, which is clearly based on economics.
British Retail Consortium director general, Kevin Hawkins, said: “After two previous inflation-busting increases the Low Pay Commission deserves praise for giving businesses time to recover and recommending no real-terms increase this year.
“But this is a bigger debate than just the size of the next increase. It’s about achieving a long-term framework for certainty and affordability.
“Taken together, the erratic increases of the past have outstripped all the economic indicators that should have guided them. This is now undermining many retailers’ ability to create jobs while the uncertainty over future costs disrupts attempts to plan investment, recruitment and pay settlements.”
The report concluded that wages could not continue to grow ahead of productivity indefinitely.
Hawkins added: “This report shows the minimum wage has shot up way above any measure of average wages or productivity. Retailers cannot repeatedly absorb substantial increases based on subjective ideas of ‘what feels right.’”
The adult NMW will rise by 17 pence (3.2%) to £5.52 on October 1 2007.
© Crimson Business Ltd. 2007
