business
Business groups urge 2.4 percent national living wage rise next year while Low Pay Commission projects up to 5 percent by 2027
Two major British business groups cautioned that further above-inflation increases to the national living wage could harm employment and push up prices. The CBI and BCC cited recent cost pressures already forcing firms to cut staff and delay investment. They called for a smaller 2.4 percent rise next year and retention of youth pay bands.
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The Confederation of British Industry and the British Chambers of Commerce warned that Labour's planned increases to the national living wage beyond £13 an hour could damage the jobs market and fuel inflation, GB News reported. The groups said employers are already struggling to absorb higher labour costs after this year's 4.1 percent rise lifted the wage to £12.71 an hour.
A BCC survey found one in 10 firms have reduced staffing levels as a result.
Successive above-inflation increases have prompted many businesses to cut jobs, delay investment and raise prices, the organisations stated. The Low Pay Commission said in March it was prepared to recommend an increase of up to five percent for 2027, with a central projection of £13.18 an hour.
Kate Shoesmith, deputy chief executive of the BCC, said any further above-inflation increases would tip more firms over the edge.
The BCC called instead for a 2.02 an hour. The BCC also urged ministers to abandon proposals to remove lower minimum wage rates for younger workers. Workers aged 21 and over currently receive £12.71 an hour while those aged 18 to 20 receive £10.85.
Labour has pledged to abolish age-based pay bands. The BCC noted the number of young people neither in education nor employment has risen above one million. Matthew Percival, a CBI director, said recent increases have outpaced productivity growth at a time when firms face rising energy prices, higher taxes and growing employment costs.
