Small businesses are calling for the rises in the National Living Wage to be delayed because of economic uncertainty.
The Federation of Small Businesses (FSB) have called for the target to raise the living wage to £8.75 an hour by 2020 to be reconsidered amid signs of a challenging economic outlook in the coming years.
The government recently coined the term National Living Wage, which is essentially the National Minimum Wage for working people aged 25 and over.
FSB pointed to falling real incomes, productivity and GDP growth as indicators that the sharp rise could be unsustainable.
Instead, they have suggested that the NLW rise from £7.50 an hour to just £7.85 next year.
According to research from the FSB, most small business already pay their staff above the National Living Wage, but 43 per cent have been forced to boost wages.
Subsequently, most small business have reported lower profit margins and 39 per cent have boosted store prices to balance the books.
“It’s vital that the [National Living Wage] is set at a level that the economy can afford, without job losses or harming job creation,” FSB national chairman Mike Cherry said.
“Cost pressures on small businesses are building, and with most recent economic indicators underperforming, we are now facing the reality that the target may need to be delayed beyond 2020.”
The autumn budget will determine the rate of growth for the National Living Wage, after the Low Pay Commission makes it recommendations as whether the rises are affordable.