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Business groups hit out at minimum wage rise

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Government measures to increase the minimum wage will be fiercely resisted, business groups have told sister site AccountingWEB.

The Low Pay Commission is reported to want to increase the minimum wage (currently £4.85 per hour) to £5.05 in October, and £5.30 in 2006.

A spokesman for the Federation of Small Business (FSB) told AccountingWEB that the FSB believed the wage hike to be engineered to win votes, and that timing of the announcement, so close to the general election, was suspect.

David Bishop said, “We’re concerned that the minimum wage has risen 35% over 5 years and believe that it should be adjusted in accordance with economic conditions. We suspect that government is trying to crank it up to £5 per hour by the election.”

While stressing that the FSB supported a minimum wage in principle, the current rate was already having an adverse effect on FSB members in certain sectors, notably small retailers, and in some parts of the country, such as Scotland, the North-west, the South-west, and the North.

He added that the Low Pay Commission should perhaps explore the idea of regional variations in the minimum wage, although he acknowledged that such a measure could be problematic and difficult to implement.

The British Chambers of Commerce (BCC) has also condemned the news, and said that a survey of 1,200 businesses found that 80 per cent rejected the increase.

The BCC says over half the companies questioned believe that further rises will damage employment prospects and competitiveness.

David Frost, Director General of the British Chambers of Commerce said: “British businesses supported a national minimum wage but last year we saw it rise at over five times the rate of inflation …Increases at this rate are simply not sustainable and could have a serious impact on jobs and competitiveness”


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Annie Hayes

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