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September 26, 2014

Does Britain need a pay rise?

Does Britain need a pay rise?Last week, a group of business leaders called for the National Minimum Wage to rise at a faster rate. Now, Ed Miliband has promised to raise the rate to £8.00 by 2020 if Labour wins the election.

However, business groups are unhappy that politicians are using the National Minimum Wage to score points with voters in the run-up to the next general election.

John Longworth, director general of the British Chambers of Commerce (BCC), said: “Businesses are in favour of an evidence-based approach to the minimum wage rather than political parties using it to gain support from voters. Existing mechanisms, such as the Low Pay Commission and Living Wage Commission, are already in place to determine the optimal resolution for workers, businesses and long-term economic growth.”

Simon Walker, director general of the Institute Of Directors (IoD), said: “Politicians should address the underlying issues holding back pay rises and must resist the temptation to turn the general election into a wage auction. Thanks to the strength of the recovery in some quarters, there are now plenty of businesses who can afford, over time, to meet this sort of wage rise without seeing a negative impact on job creation. But it must be remembered that not all companies have recovered from the recession at the same pace.”

A recent survey of IoD members revealed that nearly 80% already pay the living wage to their most junior employees.

John Longworth added: “As the economy continues to improve, businesses agree that the minimum wage must rise. In recent polling, 60% of Chamber members recommended an increase in line with current inflation, and 14% favoured an above-inflation increase.”

Last week’s letter calling for the national minimum wage to rise at a faster rate was signed by business leaders including Sir Ian Cheshire, chief executive of Kingfisher, and Steve Marshall, executive chairman at Balfour Beatty.

It said: “Now, as the economy recovers, we believe the minimum wage should rise faster than it has in the recent past. A stronger minimum wage will benefit businesses, improve public finances, and help tackle low pay."

Frances O'Grady, TUC general secretary, said: “There's an overwhelming consensus forming that the time is now right for a much bigger increase in the minimum wage. It's not only workers and their families who need it, getting money back into people's pockets will give businesses the customers they need for sustained growth.”

The TUC is holding a Britain Needs a Pay Rise rally on 18 October.

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