Minimum wage rates
Britain's largest business group has asked the Low Pay Commission to consider freezing the level of the minimum wage next October and not raise the adult rate above £5 until 2006.
Digby Jones, the director general of the CBI, the employers' body, urged caution following last month's increase in the adult minimum wage of almost eight per cent to £4.85 an hour.
Mr Jones said no one "could possibly have a clue" what effect the latest increase would have on jobs and the economy.
Government Response: Department of Trade and Industry
A DTI spokesman said: "The independent Low Pay Commission will be considering all of the representations made to it, including those from the CBI and TUC, and submitting its report to the Government by the end of next February. We will then consider their recommendations very carefully."
Stakeholder Response: Forum of Private Business
Nick Goulding, chief executive of the FPB, said: "We cannot lose sight of the fact that the minimum wage has soared by 34.7 per cent over five years - a figure well above earnings growth.
"The minimum wage is now becoming dangerously high and any further increase could have a devastating affect on the small business community. Whereas big business can absorb the increase, as they employ relatively few staff on the minimum wage, it is actually small businesses that are hit hardest especially those businesses in poorer and remote areas.
"Above all it is an unwelcome additional pressure on businesses already being stung with a range of higher costs including increased employers' National Insurance contributions and rocketing levels of insurance premiums."
Stakeholder Response: Federation of Small Businesses
Daniel Mazliah, press officer for the FSB, said: "It is time for a real debate on the minimum wage. The FSB's 185,000 members are for the most part content with the level of the national minimum wage (NMW). A 2004 membership survey revealed that only two per cent of businesses felt the NMW significantly decreased their profitability.
"However the research did reveal pockets of unease in certain regions and sectors over the possibility of further rises. These include areas such as the South West and parts of
"With this in mind, the FSB would be concerned if the Low Pay Commission became a rubber stamping exercise for continuous above inflation rises and believes there might be a case for looking into a regional NMW."
Stakeholder Response: British Retail Consortium
Dr Kevin Hawkins, BRC director general, said: "We welcome the CBI's recommendations to freeze the level of the minimum wage next October and not raise the adult rate above five pounds until 2006.
"There is clearly no justification for further increases to the NMW in real terms. The rise to £4.85 has already cost the retail industry £1.7 billion and already jeopardised jobs.
"Another rise in the national minimum wage could lead to more than 20,000 jobs being lost and would cost the retail sector an extra £2.7 billion.
"The BRC survey has confirmed retailer’s fears, that an ill thought out decision on this will hit every retailer hard.
"The retail industry employs 2.8 million people - 11 per cent of the total
"We have provided the evidence and it is now up to the Low Pay Commission to act appropriately and keep the wage at a sensible level in line with current economic conditions."
Stakeholder Response: British Youth Council
Dan Wood, chairman of the British Youth Council, said: "The CBI's comments come as no surprise but we believe the most pressing concern is that the current minimum wage system is still failing to adequately protect younger workers.
"The current minimum wage of just three pound per hour for 16 and 17-year-olds is an insult to young people who often carry out the same work as someone older but get paid less simply because of their age. Young people are one of the lowest paid and vulnerable groups of workers and they deserve a fairer minimum wage.
"Lower wages force young people to work longer hours, damaging their health and education. Businesses will also start to target young workers as a source of cheap labour and this can only get worse if the main adult rate continues to rise.
"Some businesses are already passing down the costs of a rising minimum wage onto young workers.
"Young people are rightly very angry about this and a system which clearly discriminates against them. That's why we've formed a coalition of child and youth organisations calling for an equal minimum wage for everyone above 16.
"One simple minimum wage would ensure that all workers are protected from exploitation and be easier for businesses to administrate. At the very least we're hoping that the Low Pay Commission will recommend that 18 to 21-year-olds be included in the adult wage rate and look to raise the rate for 16 and 17-year-olds in the near future.
"It's time for the government to stop running scared and give all workers, especially young people, decent wage protection."
Stakeholder Response: Chartered Institute of Personnel and Development
Charles Cotton, CIPD reward adviser, said: "While it is true that any dramatic increases in the minimum wage risk damaging business and the economy, the reality is that modest increases are unlikely to be the biggest motivator behind pay pressures at the moment.
"Sectors such as social care, retail and hospitality are traditionally seen as likely to find the minimum wage onerous, but with all experiencing difficulties recruiting and retaining staff, the minimum wage is unlikely to be the main upwards pressure on wages.
"Official figures show wage inflation remaining subdued despite a continuingly tight labour market. A modest increase in the minimum wage is unlikely to dramatically change this picture."
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