A rise in the minimum wage to £5 an hour would hit businesses hard, according to the Association of Chartered Certified Accountants (ACCA).
In a survey of 500 ACCA members, representing 10,000 firms, almost 80 per cent of respondents think an increase of the National Minimum Wage (NMW) to £5 ñ as proposed by the TUC ñ will have a serious effect on the economy and employment.
Furthermore, 38 per cent of respondents claim the existing minimum wage has already made a big impact on employment practices. Employers are more likely to abolish paid breaks, cut working hours and increase workloads to recoup costs, according to the report.
David Harvey, ACCA’s head of small business, said, “This survey shows that there is a ceiling at which the NMW will become counter-productive. It also reveals that a number of companies have already been adversely affected, even at the lower rate and that proportion is increasing year-on-year.
“While most of us in the business community support it, we are now beginning to see negative impacts on profitability and administrative burdens which will need to be monitored.
“A higher minimum wage is not a one-way bet for lower paid workers, particularly in regions where the minimum wage is high in relation to costs and prices in the local economy. At £5 an hour the National Minimum Wage would close businesses.”
But Paul Sellers, National Minimum Wage officer for the TUC, accused ACCA of scaremongering. He said, “Employers are now aware that the National Minimum Wage is under consideration for a new rate.
“The same surveys were carried out before the National Minimum Wage was first introduced. At that time employers were saying they would have to shed jobs if the minimum wage was more than £3.”
By Ben Willmott