Firms see minimum wage rise as justified – for now

will not suffer from the increase in the National Minimum Wage announced by the
Trade and Industry Secretary last week, according to the CIPD.

Byers said the rate would be increased from £3.70 to £4.10 per hour in October
followed by a rise to £4.20 a year later.

Philpott, chief economist at the CIPD, said, "I think it is broadly
justified. I think it is a bit more than some businesses would want, but if you
look at it in the context of the economy at present it is affordable.

at some stage there was a major economic downturn the increase in the minimum
wage might cause problems, but in the current circumstances it looks like a
reasonable increase."

CBI, which had opposed any increase in the minimum wage, also gave its support.
Director general Digby Jones said, "The Government has gone as far as it
can without moving to a point where the damage outweighs the benefits. It is
giving a pay rise of nearly 11 per cent to some 1.3 million low paid workers to
help ensure the wage doesn’t wither on the vine."

some business leaders have criticised the stop-go nature of the increases since
the pay floor was introduced in 1999.

is no doubt that this will have some impact on business survival and
consequently on jobs, particularly in the textiles, retail and social care
sectors," said Chris Humphries, director general of the British Chambers
of Commerce.

Phillips, HR director at ESC UK, said, "Does the minimum wage have to rise
so steeply and so frequently? Does the Government realise that it is
jeopardising the future of small businesses that do not have the profit margins
to sustain such increases?"

Ben Willmott

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