Jones: Cautious on wages

The CBI has warned the Low Pay Commission against backing a major increase in the minimum wage during 2005.

Publishing its submission to the commission on Wednesday, the lobbying organisation warned that recent rises were having a significant impact on businesses.

The minimum wage currently stands at £4.85 an hour, but the CBI warned it should not be lifted above £5 until 2006.

Director general Digby Jones said that no one "could possibly yet have a clue" about the impact of the last rise, and urged caution on future rises.

But the TUC said bosses were being "mean-spirited" towards poorly paid workers.

The CBI based its recommendation to the commission on concerns that more sectors are about to be caught by the minimum wage - including retailers, call centres and parts of manufacturing.

"There is also increasing concern among the sectors most directly affected, which include hospitality, cleaning, social care, hairdressing, textiles and agriculture," said the submission.

Jones said business leaders wanted the minimum wage to be a success.

The "big rise" implemented in October was a "a risk", he warned.

"Because it is not yet clear whether the latest rise has been successful, we need to take extreme care from here, even if there is an election looming with union pressure for more than £5 an hour," said Jones.

"Business is not against increasing the wage. We will back rises that companies can live with.

"But the LPC must not gamble with the jobs of our most vulnerable workers. The TUC's call for a rise to £5.35 in 2005 and towards £6 in 2006 is doing exactly that. It is irresponsible."

Responding to the submission, TUC general secretary Brendan Barber said it was "disappointing to see Britain's bosses put such a mean-spirited submission to the Low Pay Commission".

"There is no reason why Britain's lowest paid should see their pay frozen for the next year. The country can afford to give them a proper rise," he said.

Low pay warning

The spat over the minimum wage came as a think tank warned that Britain is continuing to experience a "low pay culture".

A report published by the Joseph Rowntree Foundation said that workers employed in low paid jobs were often still reliant on means tested benefit or assistance from family members.

Professor Jane Millar and Karen Gardiner of the University of Bath said that 23 per cent of employees were classified as low paid - a figure little changed since the minimum wage was introduced in 1999.

"Despite the minimum wage we remain a low pay culture in which a large proportion of workers have to get help from other members of their households and from the state to avoid poverty," said Professor Millar.

"This contrasts with the situation in the past. In the 1970s, only about a quarter as many low-paid workers were in poverty as today, even without the help of tax credits.

"Then, low pay was mainly restricted to people who were not the main earners in the family, but today it is more prevalent among breadwinners."