UK Employers Warn Government Of Gamble With Hike In Minimum Wage

Sample polymer five and ten GB pound banknotes are seen on display at the Bank of England in London
REUTERS/Chris Ratcliffe/pool

A planned increase in Britain’s minimum wage represents a gamble on the part of the government and could curb job growth, a top representative of the country’s employers said.

John Cridland, director-general of the Confederation of British Industry, said rising business investment was a promising sign for productivity growth, which in turn was pushing up wages.

“But wages can only grow as businesses grow. A 7.20-pound National Living Wage in 2016 and a 9-pound National Living Wage by 2020 are laudable objectives, but they are a gamble,” he said in excerpts of a speech due to be delivered on Thursday.

“And we should be careful what we wish for. Our jobs-rich recovery is a success which depends on entry-level jobs and progression routes on our high streets and in our leisure sector.”

Under a plan announced in July by Chancellor George Osborne, Britain’s hourly minimum wage will rise by nearly 11 percent in next April for those aged over 25.

Earlier this week, hotel and coffee shop owner Whitbread (WTB.L), one of Britain’s biggest employers, said it would probably take on fewer staff because of the higher minimum wage, a view shared by many other, smaller companies.

Britain’s independent Office for Budget Responsibility has estimated the new minimum wage will result in 60,000 fewer jobs and projected the cost to business would amount to 1 percent of corporate profits.

Cridland also said British exporters needed to improve their performance in selling to large and small emerging markets and to their more traditional partners in Europe.

From Reuters