Link Minimum Wage to Inflation, Business pleads

20 March 2006

The latest rise in the national minimum wage should be the last above earnings increase, employers said today. The 6% rise to £5.35 an hour, due to come into force in October, will impact strongly on businesses, the Institute of Directors (IoD) argued. Any future increases above the rate of inflation should be strongly resisted, the IoD said.

Miles Templeman, Director General of the IoD, said:

"Following last year's 5% hike in the minimum wage we urged the Government to resist a further about inflation rise in 2006, unfortunately they have ignored us. This latest rise will further erode business competitiveness and damage job creation prospects.

"Up until 2004, IoD members reported relatively few problems with the minimum wage. However, over the past year, more businesses have voiced serious concerns at the damage to competitiveness from continued over indexation of the minimum wage. There is now a real risk that the national minimum wage could lead to significant job losses as the economy weakens."