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News Release from: The Forum of Private Business
Edited by the Manufacturingtalk Editorial
Team on 22 September 2006
UK minimum wage rise may slow employment
The Forum of Private Business has found that many firms will have to push up their prices following the latest rise in the UK's National Minimum Wage - 40% of firms surveyed may increase prices.
A National Minimum Wage hike will push up prices, and put a halt to further employment at small firms The Forum of Private Business (FPB) has found that many firms will have to push up their prices as a direct result of the latest hike in the National Minimum Wage
This article was originally published on Manufacturingtalk on 13 Sep 2005 at 8.00am (UK)
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In a snapshot survey of around 100 businesses across the UK, the FPB found that 40% of respondents thought they would have to increase prices.
The FPB campaigns manager, Victoria Carson, thinks it is time to slow down the rate at which the National Minimum Wage is increasing.
"The evidence is that these constant increases, coupled with changes in maternity rights and plans to extend holiday leave, are pushing up prices".
"Little is being done to encourage smaller firms to take on more staff either." The Low Pay Commission (LPC) consultation on the rise in the National Minimum Wage ends on 20th September 2006.
The rise itself will come into force on 1 October 2006, with the adult rate increasing from GBP 5.05 to GBP 5.35/h.
Rates for 18 to 21 year-olds and 16 and 17 year-olds will jump to GBP 4.45 and GBP 3.30/h respectively.
70% of firms who responded to the survey said they would not be hiring more employees because of the impact of the increase in the National Minimum Wage, whilst 4% said they would have to make staff redundant.
The pressure on owners of smaller firms has increased, according to Carson.
"The problem with increasing the National Minimum Wage at a rate greater than the increase in average earnings, is there is greater pressure on small employers to give higher pay rises to their higher earners.
If they do not, they are left with disgruntled workers who feel that their skills deserve a greater financial reward than those colleagues who perhaps have fewer skills, but are earning much closer to their pay bracket than ever before." The FPB is pleased that the Low Pay Commission is looking at the impact of increases in the National Minimum Wage on smaller businesses, and has submitted a formal response to the LPC consultation.
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