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Businesses fight national living wage targets

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More than 16 trade associations have written to business secretary Greg Clarke urging him to slow or scrap implementation of a higher living wage by 2020.

The new business secretary has been advised by trade associations and businesses — including the retail sector — that raising the living wage to one of the highest in the developed world would be dangerous given post-Brexit referendum economic uncertainty.

They have called for the government to drop the 2020 target and for the Low Pay Commission (LPC), who are responsible for recommending the national living wage, to have their original powers restored.

Previously the LPC’s remit had been to recommend the highest possible minimum wage that wouldn’t cost jobs. Its new focus is to make certain that the national living wage, the rate for over 25-year olds, reaches 60 per cent of the UK’s median earnings.

Many experts have expressed scepticism at this unprecedented rise in workers’ wages. Raising the living wage to a predicted £9 per hour by 2020 would be the fastest rise in the history of the UK and had left economists divided.

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Some state that this policy is untested and risky given the uncertainty of the economic climate, others are adamant it will increase productivity and fairness in the workplace.

Although this was a flagship policy of George Osborne, new Prime Minister Theresa May has repeatedly said she wanted to help low paid workers.

As the £9 per hour target is “subject to sustained economic growth”, many businesses are claiming this figure is unrealistic given widespread economic doubt and are calling for more caution.

The British Chambers of Commerce (BVC) has requested a relatively small increase next April to £7.39, as opposed to the previously predicted £7.60.

“Given the economic uncertainty following the EU-referendum, the new government must be cautious about making further labour market interventions, such as dramatic increases to the national living wage, that firms may find they are unable to support,” BCC head of business Marcus Mason said.   

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Published on Monday 08 August by Ben Stevens

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