Re­strict rises in liv­ing wage, bosses urge

‘Set­ting the na­tional liv­ing wage must en­sure that peo­ple are not priced out of jobs’

The Guardian - - FINANCIAL - Phillip In­man

Low-paid work­ers in the pri­vate sec­tor should see their wages re­stricted to in­fla­tion-only rises, ac­cord­ing to busi­ness lead­ers, who said that with­out the real-terms freeze they could be forced to cut jobs.

The Bri­tish Cham­bers of Com­merce said the “na­tional liv­ing wage” should rise by a max­i­mum of 2.7%, in its re­sponse to the Low Pay Com­mis­sion’s call for com­ments on the pay level, which is due to be set in the au­tumn.

In a move that will alarm unions, the BCC said it wanted the com­mis­sion to help low-paid work­ers deal with the con­se­quences of in­fla­tion “with­out pric­ing peo­ple out of jobs”.

The gov­ern­ment is com­mit­ted to rais­ing the na­tional liv­ing wage from the cur­rent £7.50 for work­ers aged 25 and over to al­most £9 an hour by 2020. In April, the in­crease was 4.2%, and for those aged 21 to 24 it rose 5.2% to £7.05.

A BCC spokes­woman, Jane Grat­ton, said low-paid work­ers should be pro­tected from in­fla­tion­ary pres­sures, which were erod­ing their spend­ing power. “Set­ting the na­tional liv­ing wage must be done cau­tiously, com­pre­hen­sively tak­ing into ac­count eco­nomic cir­cum­stances, so that peo­ple are not priced out of jobs. The gov­ern­ment’s cur­rent pol­icy was set be­fore the EU ref­er­en­dum and so does not re­flect the un­cer­tainty caused by Brexit.

“Busi­nesses are fac­ing high costs when it comes to em­ploy­ing staff – in­clud­ing the ap­pren­tice­ship levy, pen­sions auto-en­rol­ment and skills charges.

“The rise in the na­tional liv­ing wage in April this year brought a fur­ther in­crease in wage bills for busi­ness across a wide range of sec­tors, with the need to re­tain wage dif­fer­en­tials mul­ti­ply­ing their costs fur­ther.”

The BCC’s call comes as of­fi­cial fig­ures to­mor­row are ex­pected to show that the con­sumer price in­dex (CPI) mea­sure of in­fla­tion stayed at 2.9% in June, a near four-year high. In­fla­tion is ex­pected to stay above 2.7% for much of the year. The fig­ures will show the squeeze on house­hold fi­nances as in­fla­tion out­strips wages, with the CPI hav­ing soared as the Brex­ithit pound pushed up the price of im­ports.

Road fuel prices are be­lieved to have fallen by 1.1% month-on-month in June, ac­cord­ing to es­ti­mates by Sco­tia­bank, while the cost of core items such as cloth­ing, house­hold and recre­ational goods con­tin­ued to rise. Alan Clarke of Sco­tia­bank said food prices and air fares were likely to have made sharp gains last month, with smaller rises in al­co­hol, restau­rant and pack­age hol­i­day costs.

Ris­ing in­fla­tion has cut dis­pos­able in­comes, which, along with slug­gish wage growth and ris­ing debt lev­els, has meant the big­gest de­cline in con­sumer con­fi­dence in more than two years, ac­cord­ing to the Con­sumer Tracker re­port from Deloitte. The quar­terly sur­vey of 3,000 peo­ple, car­ried out be­tween 16 and 18 June, saw over­all con­sumer con­fi­dence fall to mi­nus 10% in the sec­ond quar­ter of 2017, from mi­nus 7% in the first quar­ter.

Spend­ing on es­sen­tial items and dis­cre­tionary spend­ing fell com­pared with the pre­vi­ous quar­ter. The re­port said spend­ing on eat­ing out and the cinema fell back for the sec­ond quar­ter in a row – “in a sign that the re­cent up­ward trend in leisure spend­ing has also been hit”.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.