Small firms would struggle with minimum wage increase

23/11/07 16:19

Businesses have criticised TUC recommendations for a higher minimum wage to be implemented in 2008.

Today the Trades Union Congress will call on the Low Pay Commission (LPC) to increase the minimum wage to £6 an hour next year. They will present evidence urging the LPC to recommend the best minimum wage rates that the economy can afford.

Brendan Barber, TUC general secretary, believes that the increase won’t affect businesses. He added: “Britain is the fourth largest economy in the world and has enjoyed more than a decade of economic growth. Despite gloomy warnings from employers that raising the minimum wage will cost jobs, every increase since 1999 has been absorbed without any adverse affect on the economy.

“Although some economic commentators have been jittery the UK economy is basically sound. They should remember that we have both record levels of employment and a record number of businesses in the UK.”

However businesses groups such as the Forum of Private Business (FPB) believes that a rise would hit companies financially, and insists that any increase must be in line with inflation.

“There is no point in plucking out a figure from the air,” said the FPB's campaigns manager, Matt Hardman.

“Any increase in the minimum wage must be linked to the Retail Price Index so that smaller businesses are more able to afford it. In the past, they have been well above the ability of many of our members to raise their prices in order to cover their costs. The FPB would like to see a common sense approach to increasing the minimum wage, so that it is not disproportionate to the cost of living.”