From the TUC

Minimum wage to increase by 13p: Usual suspects recoil in horror!

24 Mar 2010, by in Labour market

There has never yet been a minimum wage increase that has failed to provoke dire prognostications from some employers groups and today was no exception. Last autumn we once again saw employers’ groups lining up to argue that the minimum wage should be frozen.

Leaving aside the question of why low paid workers should have to bear a disproportionate part of the cost of the economic mess created by super-rich city bankers, what we have here is a clear case of the sum of individual wisdom adding up to collective foolishness. Of course some employers don’t want to pay their staff more, but they certainly all want their customers to spend more. In fact, minimum wage workers are most likely to spend 100% of any pay increase, thus generating a modest fiscal boost to the economy.

Today the Government announced that the minimum wage would increase from £5.80 to £5.93 in October (+2.2%).  Average pay settlements are currently running at about 1.9%, but we expect this figure to increase by October in response to inflation.

In short, the minimum wage increase is close to the average wage increase across the economy, so the LPC has been cautious – but you would not think so to see the response from some industry leaders.

Here’s the Director-general of the British Retail Consortium:

“This increase is downright irresponsible. It’s at odds with Government promises of prudence and public sector freezes and will damage retailers’ ability to maintain and create jobs… it’s sheer madness to be forcing new costs on this scale on to retailers and their suppliers.”

Here’s the director of policy at the British Chambers of Commerce:

“A near-doubling on last year’s increase is … astounding. Combined with next year’s rise in employer National Insurance contributions, a minimum wage that’s a one-way bet could stop some businesses taking on new workers.”

Of course, the truth is that the Low Pay Commission, which includes three representatives from business including the CBI, looked at the economy very carefully and made a modest recommendation. To paraphrase Michael Winner – calm down, it’s only an extra 13 pence!

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