Minimum Wage Puts Industry on Defensive

The Birmingham Post (England), October 1, 2004 | Go to article overview

Minimum Wage Puts Industry on Defensive


Byline: Ruth Nolan

Business concern was mounting today as the minimum wage figure moved closer to the wage band which includes employees working in manufacturing.

When the two meet, companies fear it could have catastrophic effects on industry in the Midlands as the British worker becomes too expensive.

They may have no choice but to seek a cheaper workforce abroad - resulting in redundancies rather than increased pay.

Following recommendations published in the Low Pay Commission annual report in March this year, the Government has further increased the National Minimum Wage to pounds 4.85 per hour for workers aged over 21 and pounds 4.10 for workers aged 18 to 21.

School leavers aged 16 and 17 will benefit for the first time with a new minimum wage being set for them at pounds 3 per hour.

Since it was introduced in April 1999 the NMW has come under scrutiny at every possible interval and this year is no different.

Fears that employment levels within the services sector would decline under the scheme remain unquashed, even though reports show that over the last four years the opposite is true in notoriously low wage sectors.

'Intriguingly, there is still no clear evidence that moving the minimum wage along at seven per cent a year has yet had a negative impact on employment levels.

'Indeed, employment continues to grow in sectors such as retail, catering and leisure where the minimum wage has a major influence on pay,' said Alistair Hatchett, head of pay services at the Incomes Data Service. His statement was backed by Chris Clifford of the CBI in Birmingham, who said the steady increase in the national minimum wage had been carefully managed to date. However, the CBI has voiced reservations regarding future rises.

'We can expect an inevitable increase over the next year to the pounds 5 per hour mark and it is then that we should be careful,' said Mr Clifford. Jerry Blackett, policy director at Birmingham Chamber of Commerce and Industry, said: 'It is fair to say that the minimum wage increases are not a worry to over 90 per cent of our members at the moment. But there will be anxieties about eroding differentials in salaries and heavier overheads if the minimum wage goes over pounds 5 an hour. We do not want to get to the situation where small companies are having to lay off staff because of it.'

A reported 1.1 million workers were direct beneficiaries in the 2003 increase and this year that figure is set to rise to 1.6 million - but what about the rest of the UK's workforce?

Earlier this week Usdaw - the Union of Shop, Distributive and Allied Workers - highlighted what it believed to be a disturbing recent trend of some employers to pay workers aged 18 to 21 less than their older colleagues.

Paddy Lillis, Usdaw deputy general-secretary, speaking at the Labour Party Conference in Brighton, said: 'The vast majority of employers pay the adult rate at 18, but recently several employers have been introducing lower pay for 18 to 21 year-olds. Not because these young people do not work hard, or as well, but because companies can cut costs by paying them less. …

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