PracticeConsultingNew minimum wage – no cause for pessimism.

New minimum wage - no cause for pessimism.

On Monday last week the minimum wage negotiated a significant hurdle. In raising the bar for adults from Pounds 3.70 to Pounds 4.10 an hour, the government did just what the CBI had warned against.

Late last year the employers’ body cautioned that increasing the rate to more than Pounds 4 per hour would leave many businesses struggling to cope with higher wage bills, with a knock-on effect on employment.

In truth those fears are unlikely to materialise, though other factors are now likely to blight the economy for months to come. It is the job of bodies like the CBI to rail against government initiatives when they feel the interests of their members might be under threat. But it is worth remembering that pessimists were predicting massive job losses back in 1999 when the minimum wage was introduced. There is no evidence these losses materialised.

It is also worth remembering that while some groups were predicting dire consequences from the introduction of the threshold, FDs were more sanguine.

Some 80% of 200 FDs we polled two years ago said the minimum wage would not have an adverse effect on their business. It is likely they feel the same about this week’s rise.

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