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Business groups respond to suggested minimum wage rise

25 Feb 2015

Business groups have broadly welcomed the recommendation that the National Minimum Wage (NMW) should rise by 3% in October 2015.

In its annual review of the NMW, the Low Pay Commission (LPC) has recommended that the main adult rate should increase from 6.50 to 6.70 an hour, representing an above-inflation increase of 3%.

The recommendations from the LPC would also see the hourly rate for 18-20 year olds rising by 3.3% to 5.30, while the rate for 16-17 year olds would see a smaller increase, rising to 3.87, and the apprentice rate would increase to 2.80.

Commenting on the LPC’s report, Katja Hall, director-general of the Confederation of British Industry, said: ‘The LPC has struck a careful balance. As the economic recovery cements, the Commission has reconciled a desire to reflect this in pay packets while recognising that productivity growth the key to sustainable pay rises remains weak.

‘We welcome the commitment to review next year’s rise if the improved business environment doesn’t materialise.’

Meanwhile, Dr Adam Marshall, executive director of policy and external affairs at the British Chambers of Commerce, said: ‘A 3% rise will be a welcome boost to many staff, and comes at a time when firms are healthier, more confident and more able to afford an above-inflation rise’.

The TUC expressed some disappointment, arguing that recent reports of a strengthening economy would support the case for a bigger increase in wages for low paid workers.

However, the LPC warned that sharper increases in the NMW could pose a risk to jobs and increase the pressure on small businesses.