Scale of National Minimum Wage increase adds to cost pressures on business

16th April 2013

Commenting on the government's decisions today on National Minimum Wage rates from 1 October 2013, Dr Adam Marshall, Director of Policy at the British Chambers of Commerce (BCC), said: On the adult National Minimum Wage rate:   -We are disappointed that the government has chosen to raise the adult National Minimum Wage rate by 1.

9%, an increase that is over 50% higher than current average pay growth. While the pressures of inflation are affecting many people, including the lowest-paid, the scale of this rise adds significantly to business costs, most of all by contributing to broader pay inflation. It will also make some employers less inclined to hire additional members of staff.   On the Youth and Development rates and the Apprenticeship rate:   -Restrained increases in the youth and apprenticeship rates of the National Minimum Wage will ensure employers have a continued incentive to hire young people, despite the fact that many lack demonstrable work experience. Ministers must remember that as well as wage costs, businesses must invest heavily in many young people to ensure they are ready for the world of work. They should therefore focus their energy on ensuring that the education and training system becomes more responsive to the needs of employers.   On ensuring compliance among employers of Apprentices:   -Law-abiding businesses have no problem with enforcement of the National Minimum Wage for apprenticeships, particularly in cases where unscrupulous individuals deliberately flout the rules. However, law-abiding companies tell us repeatedly that the government must communicate better and more consistently with businesses, to ensure that all companies understand the rules for employing an apprentice.