BusinessCompany NewsRage over minimum wage increase

Rage over minimum wage increase

Businesses groups have warned that companies will be hit hard by a 7.1% rise in the minimum wage announced today.

Link: Higher minimum wage will hurt business

Patricia Hewitt, trade and industry secretary, announced that in October the adult minimum wage will rise 30p to £4.50, and that the wage for workers aged 18 to 21 will rise 20p to £3.80. The decision follows recommendations from the Low Pay Commission.

Depending on economic sustainability, both age groups in October 2004 will receive another rise bringing their respective wages to £4.85 and £4.10. The government is also considering setting a minimum wage for 16 to 17 year-olds.

‘These increases are well above the rise in average earnings and will benefit more people than ever across the UK,’ Hewitt said.

The British Chamber of Commerce believes that even before the rise, the minimum wage was ‘only just sustainable’ for companies. BCC director general David Frost has said the decision shows that business is low on the government’s priority list. He warned that the wage increase could force companies to cut jobs.

The Federation of Small Business warned the wage increase could be detrimental to small businesses. It said the rate increase of the minimum wage had been too high. The minimum wage was first defined in April 1999, when it was set at £3.80 for adults and £3.00 for youths.

Unions, on the other hand, believe the rise is still not ‘enough to live on’ and have been campaigning for a £5 minimum.

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