The CBI made the claim in evidence published this weeek to the Low Pay Commission, the independent body tasked with introducing a new minimum wage by October 2001.
It urged the Commission to continue using the minimum wage as a floor below which wages should not fall, rather than an escalator for forcing up pay levels.
The CBI warned increasing the rate to more than £4 per hour would leave many businesses struggling to cope with higher wage bills, with a knock on effect on employment.
The CBI also opposed, automatic annual increases, which could prove unaffordable during an economic downturn.
John Cridland, the CBI’s Deputy Director-General and a business representative on the Low Pay Commission, said: ‘The minimum wage has worked well overall. We should prevent it withering on the vine by raising the rate as circumstances allow.’
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