UK manufacturers call for minimum wage formula

The UK’s manufacturers have called for a pre-determined formula to be used for setting future increases in the National Minimum Wage (NMW).

The EEF, the manufacturers’ organisation, argued in evidence submitted to the Low Pay Commission that recent increases in the NMW are starting to have an impact on pay levels and remuneration structures in manufacturing through the need to maintain pay differentials.

The organisation said that a formula – based on a retrospective analysis of the movement of basic rates of pay across the economy – would provide employers with the benefit of greater certainty about future increases.

David Yeandle, deputy director of employment policy at the EEF, said: “Whille, to date, manufacturing companies have generally been able to live with the National Minimum Wage, recent increases are clearly now beginning to bite.

“With pressure beginning to mount for further increases, what employers now want above all else is certainty about the impact that future increases will have on their business [so they can then] plan accordingly,” he said.

The EEF has also warned that the TUC’s recommendation to increase the NMW to £6 per hour over the next two years will inevitably have an adverse impact on costs for many manufacturers which would threaten their international competitiveness.

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