The Government is being urged to overhaul the UK’s minimum wage policy following the vote to leave the European Union, with warnings of damage to the economy and businesses if it does not.
According to the British Chambers of Commerce, the Government’s “politically driven” approach to setting the national living wage could cause it to become “unaffordable” to hire staff.
The lobby group argues in its submission to the Low Pay Commission’s consultation on future increases that a failure to calibrate the policy could push up prices, raise unemployment and even force companies out of business.
As of April 2016, the minimum wage for workers over the age of 25 rose by 7.4 per cent to £7.20 and it is proposed that the national living wage could rise to £9 by 2020.
However, the BCC said that the decision to leave the EU means it is vital to return to an “evidence-based” approach when setting the wage floor, otherwise it could lead to increased prices or even bankruptcies.
The group argues that the national living wage policy was set before the result of the vote and therefore the Government should reassess the policy in its aftermath, taking into account new economic data and forecasts, once these become available.
It is the BCC’s contention, based on “conservative” forecasts that the minimum age should rise by 2.4 per cent to £7.39 next April because “pressing ahead blindly” towards the £9 target would hit small businesses hardest.
Given that these organisations account for over 99 per cent of all private sector businesses and employ more than 15 million people, this would be disastrous.