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UK employers want freeze on minimum wage

Press Trust Of India  |  London 

With companies facing severe credit crunch, a top body of British employers today asked for freezing of the national minimum wage until the economy recovers from the financial downturn.

The British Chambers of Commerce (BCC) has written to the Low Pay Commission public body, which advises the government on the rate, that the minimum wage should remain at current levels, else it would only add to the unemployment.

Employers are facing severe credit crunch and the situation is expected to worsen during 2009. Many companies have collapsed and gone into administration due to the prevailing economic situation, it said.

Currently the minimum wage stands at £5.73 an hour for adults, £34.77 for 18 to 21-year-olds and £3.53 for 16 and 17-year-olds.

An increase in 2009 in line with the 2008 rise introduced in October would cost companies £300 million, said BCC, the national body for a powerful and influential network of accredited chambers of commerce.

“We're not opposed to the minimum wage going up when employment is high and the economy is doing well. But when jobs are being lost daily and a recession is in full swing, it makes no sense to increase it,” BCC director David Frost said.

“Most businesses are prioritising survival at the moment. A rise in minimum wage would not help firms hold on to staff and would simply add to unemployment," he added. According to the BCC, three million people are likely to be out of work by 2010.

The Chartered Institute of Personnel and Development (CIPD) has also warned that 2009 could be the worst year for jobs in two decades, with 600,000 workers facing redundancy and others having their pay frozen.

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First Published: Tue, December 30 2008. 00:00 IST