Business groups have given a mixed response to a National Minimum Wage (NMW) increase of 2.2%.
Currently £5.80 per hour, the NMW will increase to £5.93 from 1 October 2010. The Department for Business is also introducing a new minimum rate of £2.50 for apprentices.
Confirming the change, Business Minister Pat McFadden, said the increase had been decided on after consultation with employers and trade union representatives to balance ‘the needs of businesses and workers’.
He added: “Today’s recommendations provide a welcome increase for workers, but the economy is still fragile and government must continue to support the recovery in the months ahead.”
John Cridland, deputy director-general, Confederation of British Industry (CBI), said the increase was reasonable: “This moderate increase recognises that many businesses are struggling, and helps protect jobs at a time of rising unemployment. The inflation-busting rise some unions had called for would have hit firms hard and put many lower paid workers on the dole.”
However, the Federation of Small Businesses (FSB), was less satisfied with the rise.
Ben Burgher, FSB employment law committee chairman, said:“Small businesses have been doing all they can to take on and retain staff during these tough times, but raising the National Minimum Wage (NMW) alongside the proposed 1% national insurance increase will add to the wage bills of employers.
“For the worker after tax, this increase in the NMW will mean an extra £1.54 a week. But for an employer the impact of the increase could add thousands on their wage bill.”
Adam Marshall, policy director at the British Chambers of Commerce, also criticised the increase: "It is astounding that the government would increase the minimum wage by 2.2pc at a time when private sector wages are virtually flat, and companies across the country are still making tough choices to keep as many people in employment as possible."