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‘Too high’ minimum wage level could hit jobs

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07/03/2007

The rate at which the minimum wage is increasing should be slowed to prevent it impacting adversely on employment and denting UK investment in the workplace, the Work Foundation (WF) has warned.

David Coats, assistant director at the WF, said: “The rate of growth in the minimum wage should be no faster than that of average earnings.”

The minimum wage has risen at a faster rate than average pay recently and is now £5.35 for the over-25s – and the Government is to announce a new figure next week.

This is not enough for the unions, which want to see a minimum statutory minimum rate of £7 per hour as a UK investment in the national workforce.

But Coats, who once advised the Government on the minimum wage and was a leading member of the Low Pay Commission, said that a settlement of £7 per hour would be a threat to employment and would constitute a poor UK investment for businesses.

He observed: “There is no doubt that once you go above a certain point, there will be an adverse impact on the UK investment in employment made by British business.

“I think that £7 per hour is definitely above that level.”

He believed that a figure in the region of £5.65 per hour would be “reasonable”.

LATE NEWS: The Government has announced that the minimum wage is increasing 3% by 17p to £5.52 per hour from this October.

 

 

 

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