Restrict rises in living wage, bosses urge
‘Setting the national living wage must ensure that people are not priced out of jobs’
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”.