Britain’s lowest-paid workers were given a major boost when the coalition government announced the minimum wage is to increase by 15p per hour from October.
“We just have to hope that in trying to help people the government has not priced them out of a job.”
But a spokesman for the Federation of Small Businesses Scotland (FSB) said it supports the principle of a minimum wage but warned this is the wrong time for a significant rise.
“The FSB supports the principle of a national minimum wage,” he said. “It helps level the playing field and eradicates the cowboys who would have poor working practices.
“While we can sympathise with the intention, businesses as well as individuals are feeling the squeeze. An increase like this will put additional pressure on some small businesses.
“In comparative terms, small businesses are getting squeezed more by banks, the cost of fuel and big businesses-for some this will be difficult to absorb.”
Stephen Robertson, director general of the British Retail Consortium, said, “At a time when the priority should be getting more people into work, any increase in staff costs is an extra hurdle. This rise is at the very top end of what retailers could be expected to live with.
“Employers have just been hit by an increase in National Insurance, business rates have soared, and retailers are still absorbing much of the increase in VAT.
“This increase in the minimum wage is yet another challenge to retailers when trading is already difficult on the high street.
“A third of retail staff are under 25. Young people are facing some of the biggest challenges on the jobs market at the moment, and this increase makes it harder for retailers to expand and create the jobs needed.”
The move was welcomed by Citizens Advice Scotland, although some business groups warned small firms may find it difficult to absorb rising staff costs, while some even warned that the increase could lead to job losses.
Business secretary Vince Cable revealed the government had accepted the independent Low Pay Commission’s (LPC) recommendations to increase the adult rate of the minimum wage by 15p to £6.08 an hour.
The rate for 18 to 20-year-olds will go up by 6p an hour to £4.98 while the rate for 16 and 17-year-olds will rise by 4p to £3.68 an hour. The rate for apprentices will increase by 10p to £2.60 an hour.
Mr Cable said, “More than 890,000 of Britain’s lowest-paid workers will gain from these changes. They are appropriate, reflecting the current economic uncertainty while at the same time protecting the UK’s lowest-paid workers.”
LPC chairman David Norgrove said, “We welcome the government’s acceptance of our recommendations. The commission was again unanimous, despite all the economic uncertainties.
“We believe we have struck the right balance between the needs of low-paid workers and the challenges faced by businesses.”
Shop workers’ union USDAW welcomed the rise. Its general secretary John Hannett said, “This modest rise will be welcome news for the millions of low-paid workers and their families, who rely on the National Minimum Wage to help them maintain a decent standard of living.’Some respite'”The rise in the adult rate keeps pace with current wage settlements in the economy and while there will be some disappointment at the lower increase for young workers, the package does offer some respite from the severe financial pressures many people are under at the moment.”
Citizens Advice Scotland chief executive Lucy McTernan also welcomed the rise but said it is dwarfed by increases to the cost of living.
She said, “Obviously any extra money is welcome, but these things have to be seen in the context of the overall economic situation, and the reality is that the cost of living is going up so much that for most people such increases in minimum wage will be easily swallowed up.
“And people who are on minimum wage are already being hit hard and disproportionately by government cuts and changes to tax and welfare policies.
“Only this week for example many families have been hit by changes to tax credits. Those families with a child under one year old will lose £45 per month. And the amount of help people can get for child care has dropped substantially as well.
“So while the increase in the minimum wage will provide help for some, it is easily outweighed by the overall cost of living, and of course it will do nothing at all for those who are unemployed or living on benefits.”
Alan Mitchell, chief executive of the Dundee and Angus Chamber of Commerce, warned some businesses might have to cut staff numbers due to rising costs.
He said, “I would suggest that the vast majority of our members won’t be affected by this because they already pay more but there will be some sectors of the economy, like retail and some service sectors, where it could have an impact.
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