Engineers’ federation calls for minimum wage formula

Manufacturers
are calling for a pre-determined formula to set the National Minimum Wage
(NMW).

The
Engineering Employers’ Federation (EEF) has told the Low Pay Commission (LPC) a
pre-determined formula is needed to set the next and, any subsequent, increase
in the NMW.

The
EEF believes that adopting this approach will enable companies to have greater
certainty about the level of future increases in the NMW and avoid decisions
being made for politically motivated reasons.

The
EEF also criticised the excessive demands currently being made by the TUC,
which would lead to an adverse direct impact on manufacturing.

But
the EEF said it was essential the formula should be based on a retrospective
analysis of the movement of basic pay rates across the economy and not average
earnings, which include bonuses and overtime.

The
EEF has also expressed no objection to reducing the age at which the NMW adult
rate is paid from 22 to 21 and the removal of the exclusion for employees aged
16 or 17 providing that their rate is set at a significantly lower level than
the NMW ‘youth/development’ rate.

EEF
deputy director of employment policy David Yeandle said: "The NMW has had
only a relatively minor direct impact on manufacturing and it is important that
this position is maintained to avoid adversely affecting industry’s
competitiveness. Linking all future increases to the pre-determined formula
that we are suggesting will meet this objective and enable employers to plan
for the future with greater confidence."

By Quentin Reade

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