CBI under attack for opposition to increased wages

New figures show the benefits of higher minimum wage

The Confederation of British Industry (CBI) is being criticised for its continued opposition to an increased minimum wage.

From October 1, the adult minimum wage will rise from £4.50 to £4.85 per hour, an increase of 7.8 per cent.

In response the CBI has blasted the decision, predicting that UK jobs will be lost as employees struggle with tougher pay structures.

It has also warned that many firms may be forced to transfer their employee base to alternative parts of the world in order to benefit from cheaper labour costs.

Digby Jones, head of the CBI, said: “I have not heard one employer say it should go up. £4.85 is not dangerous but it is moving away from being a safety net to having a deleterious effect.”

However, figures released by the TUC indicate that despite a rise of 30p in the national minimum wage last year, employment has grown in sectors of the economy where it has had the most impact, such as retail and leisure.

The steady annual increase in the minimum wage seems to be having a positive effect, with employees, excluding the self-employed, increasing from 24,349,000 in 2003 to 24,458,000 in 2004.

Figures also show that 53 per cent of female part time workers are also benefitting from the increases.

Brendon Barber, TUC General Secretary, said: “The minimum wage is doing the business. It helps around a million people every time it goes up, most of them part-time women workers, and jobs have been gained not lost.

“But the CBI seems to be stuck in a minimum wage ‘Groundhog Day’, every time it increases they cry wolf on job losses. It’s time they accepted that the wage works and instead concentrated on helping the Government and trade unions crack down on employers who are still not paying staff the legal minimum.”

What is certain is that many firms will have to review their approach to pay structures and the timing of pay reviews as the gap closes between lower and higher earners.

Alaister Hatchett, head of pay services at Income Data Services, said: “The increase in the minimum wage – outstripping the rise in average earnings – have forced employers to rethink their grade structures and introduce new ways of working.”

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