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Minimum wage review could damage local jobs


Local business leaders have called on the Low Pay Commission to exercise extreme caution in its recommendations to the government on future developments of the Minimum Wage. The Eastern Branch of the Institute of Directors, representing more than 900 company directors in Cambridgeshire, has said that any automatic link with prices or, especially, earnings could damage local employment opportunities for those “at the margins of employability”.

Company leaders fear that, if there is an economic downturn, they may have to lay off workers if the Minimum Wage is too high because they will not be able to afford to pay the wage bill. A lower level of Minimum Wage may protect vulnerable jobs.

The IoD’s Eastern Branch chairman Stephanie Smye says: “Whilst Cambridgeshire currently benefits from a buoyant job market, there are still many people who would be adversely affected by an increase in the minimum wage.

“We have already seen certain business sectors, such as care homes, hit by the additional costs and regulatory burdens at a time when they are facing an avalanche of employment regulations.

“Of course, we want to see local people earning a decent minimum wage but not at the expense of job losses for the most vulnerable in the workforce. Some people are already at the margins of employability - it is only just worthwhile companies employing them because firms are not able to raise prices to cover high wage costs. Caution is the key.”

She continues: “The fact that the Minimum Wage was introduced at a fairly realistic level and at an opportune time means that the effect on local employment has so far been modest. However, the continuation of such favourable circumstances cannot be guaranteed and there is no room for complacency.”

November 2000

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