Business reacts to proposed minimum wage rise

20 Jan 2014

Insisting  that the economy can afford it, Chancellor George Osborne has proposed an  above-inflation rise in the national minimum wage.

The  current rate, which is set at £6.31 for people over the age of 21, has not  increased commensurate to inflation since 2008 and has therefore fallen in real  terms.

The  minimum wage rate is set by the independent Low Pay Commission, which includes  representatives of business, unions and academia. It is due to make its latest recommendations  on the minimum wage next month.

Business  Secretary Vince Cable, who oversees the commission, said ‘I want living  standards to go up for the whole country as we fix the economy’.

With  inflation set at 2%, the Chancellor’s proposed minimum wage increase is 10% –  raising it to £7 an hour by 2015.

Alexander  Jackman, Head of Policy at the Forum of Private Business (FPB), said they are ‘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’.

The  Confederation of British Industry (CBI) Director-General John Cridland, agreed  with the sentiment, saying, ‘An unaffordable rise would end up costing jobs and  hit smaller businesses in particular. Any increase in wages must reflect  improved productivity’.

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