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CBI calls for steady minimum wage approach

07/10/2007

The Confederation of British Industry (CBI) has warned that the recent hike in the minimum wage will further harm the competitiveness of businesses that are already facing unstable trading conditions.

The business community's representative said the lowest possible wage payable had increased by 53 per cent since its introduction in 1999 and was now at a level that was only higher in France and Australia.

It also stated that the minimum wage had risen faster in the UK than in any other OECD country if productivity accounts are taken into account

In its report to the Low Pay Commission, the employers' body warned that a series of increases over average earnings growth was discouraging further investment and employment and called for only a "modest increase" in the wage in 2008.

It warned that sectors such as retail, agriculture, social care, food manufacture, hospitality catering, textiles and hairdressing were especially affected by the legislation.

CBI deputy director-general John Cridland said: "Many people's living standards have been helped by the minimum wage. But previous steep rises have loaded extra costs onto employers, who face a less certain outlook for next year as interest rates bite and the world economy slows.

"This year's increase makes our minimum wage the third highest in the world. The era of continually increasing the numbers of employees covered by the wage should now come to an end - the Low Pay Commission itself acknowledges the present situation requires 'a more cautious approach'."

The CBI warned that firms would now have fewer resources to reward employee performances and provide incentives to staff to increase their skills.

"Employers are in favour of a minimum wage which stays relevant and enables those at the lowest end of the labour market to maintain their standard of living, but the increases must always remain affordable for the whole economy," Mr Cridland concluded.