CBI leader Digby Jones has told the Low Pay Commission (LPC) that business is ready for the £5.00 minimum wage but that its introduction should be delayed until 2006.
Employers’ group the CBI say that in 2005 the LPC should stop short of making any further above-inflation raises for the minimum wage.
The LPC has proposed raising the wage by more than inflation every two years and recommended a nominal rise of ten pence during the intervening period – a so-called pause year.
A year long period allows business groups to assess the impact of increases while preventing the wage decreasing in value; say the CBI.
It also gives employers more time to address their greatest concern: restoring the gap between those paid the minimum wage and those paid just above it; add the group.
Digby Jones urged the LPC to not ‘be afraid’ of keeping the wage at £4.85 an hour for adults.
Concern that the LPC will take the lead from the two consecutive 7% increases that occurred this year is worrying the employers’ group.
Upwards increases have outstripped earnings growth putting pressure on traditional low-pay sectors including retail, call centres, parts of manufacturing, hospitality, cleaning, social care, hairdressing, textiles and agriculture according to the CBI.
Digby Jones commented: “The minimum wage is a success and business wants it to stay that way. Caution has been the secret of that success, but the recent second big rise was a risk. Because it is not yet clear whether the latest rise has been successful, we need to take extreme care from here, even if there is an election looming with union pressure for more than £5 an hour.
“Business is not against increasing the wage. We will back rises that companies can live with. But the LPC must not gamble with the jobs of our most vulnerable workers. The TUC’s call for a rise to £5.35 in 2005 and towards £6 in 2006 is doing exactly that. It is irresponsible.”
The CBI leader said he wanted to see the government starting to link increases in the minimum wage to improved ‘skilling’ of the lower paid.
Related articles:
- TUC make fresh call for NMW rate rise
- FSB calls for a regional minimum wage
- Retailers warn of jobs slash if NMW goes up
