Business groups advocate minimum wage freeze

Posted on 16 Feb 2010 by The Manufacturer

The Chartered Institute of Personnel and Development has backed calls from the Confederation of British Industry for a freeze in national minimum wage for younger workers.

Both groups say a rise in the rate for under 22 year olds not sustainable under current trading conditions and would ultimately end up costing jobs as well as making young people a less attractive pool of potential resource. It says only a nominal rise, pegged to inflation, should be applied to the minimum wage for those aged 22 and over.

“In a recession it is vital that the preservation and creation of jobs takes priority over pay increases,” says CIPD. “The current downturn is having a far bigger impact on young people than other age groups and it is important to avoid any changes that makes this group less attractive to employers.”

Last week, Richard Lambert, director general of the CBI, said: “Although the overall impact of the minimum wage has been positive, trade-offs clearly do exist in terms of employment prospects. That has clear implications for how the minimum rate for young people should be set in the future.”

The comments were solicited after reports circulated that Labour is planning a sharp rise in the minimum wage in order to boost the economy from the bottom up.
However, “businesses should be free to negotiate pay levels with staff individually according to what is affordable during these tough times, rather than keep up with a one size fits all pay rise,” agreed John Wright of the Federation of Small Businesses

Minimum wage is currently £5.80 for those aged 22 or over and £4.83 for those aged 18 to 21.