Organisations and unions clash over National Minimum Wage increases

Employer bodies and trade unions are again at loggerheads over the future of the National Minimum Wage (NMW), with the British Retail Consortium (BRC) warning that further increases would pose difficulties for business.

The group presented evidence to the Low Pay Commission that claimed another rise in the minimum rate of pay could lead to the loss of more than 20,000 jobs.

BRC director general Kevin Hawkins said that a further increase could cost the retail sector £2.7bn, and that many companies would be unable to absorb the impact because of rising electricity and fuel costs and new business rate increases.

He called on the commission to bring the NMW timetable into line with the financial planning cycle for businesses, so that future increases reflect the employers’ ability to pay more accurately.

“The situation has changed significantly since we last gave evidence two years ago,” Hawkins added. “It’s now clear that the two consecutive increases of 7-8 per cent are having a negative effect on retailers.”

Manufacturing organisation the EEF also believes that the wage increases are beginning to bite, and David Yeandle, deputy director of employment policy at the EEF, has called for a standard formula to be used when deciding any potential increases.

The Federation of Small Businesses has proposed a regional minimum wage to help address some of the economic variations around the country, but the TUC wants to see the adult minimum wage rise to £5.35 by next October, and to £6 by 2006. It also wants the adult rate to be paid from the age of 18, rather than 22.

The commission is expected to make its recommendations by February 2005.

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