Firms fear higher pay could cost thousands of jobs

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BUSINESS leaders in Yorkshire have warned that forcing firms to pay the so-called ‘living wage’ could have a disastrous effect on the wider economy.

Chris Glen, West Yorkshire’s regional chairman for the Federation of Small Businesses (FSB), said it was vital that wage levels remain a “voluntary decision” or companies would be forced to sack employees to make ends meet.

“The living wage is an important aspirational goal, but the FSB believe this should not become a statutory requirement of all businesses,” he said. “Such a move would risk stoking inflation and driving up unemployment.

“The FSB believes paying each staff member a living wage should remain a voluntary decision for employers, agreed on a company by company basis.”

Mr Glen accepted that low pay is an issue for many workers, however, but suggested the economic recovery will eventually translate into wage increases. In the meantime, he said, Ministers could do more to help firms boost pay.

“Most small businesses will increase pay as confidence continues to grow, and when there is more certainty around cash-flow,” he said.

“Government should therefore look proactively at ways in which pressure on small businesses can be relieved, such as through stemming the rise in business rates and tackling spiralling fuel, utility and rent costs.

“By creating the right policy environment, companies will be then best placed to share the benefits of growth with their staff.”

Union bosses, however, insist the current minimum wage remains far too low at £6.33 per hour, and that the increase recommended by the Low Pay Commission last month will make little difference to workers on the breadline.

They added the Government’s controversial decision last year to scrap the Agricultural Wages Board - which said minimum wage levels for farmworkers - will actually make the situation worse in rural areas over the coming months.

Karen Reay, Unite regional secretary for Yorkshire, said: “Yorkshire’s low-paid needed a significant boost in the national minimum wage to help combat the spiralling cost of living. Instead they are in line to get a measly increase of 19p an hour.

“What’s really worrying is that the impact of scrapping the agricultural wages board has not fed through, and we fear the effects of the Tory attack on workers will become even worse in the coming months.”