Minimum wage rise to hit recruitment - from Recruitment Today

1st April 2010

The minimum wage rise - sneaked out in Treasury paperwork after the Budget - represents a real risk to the jobs of thousands of workers and could hit young job seekers hard, the Chartered Institute of Personnel and Development (CIPD) has warned.

From October, the adult minimum wage will increase by 2.2% to £5.93 an hour.

CIPD Performance and Reward Adviser Charles Cotton said: "The LPC (Low Pay Commission) is a generally sensible body but this year's recommended hike in the NMW looks to have thrown caution to the wind, especially with regard to the youth and new apprenticeship rate.

"It is difficult to see how this increase will help create jobs or offer a boost in training places for unemployed young people. In particular, combining a higher minimum wage with the impending hike in employers' national insurance contributions really would represent a hefty 'tax on jobs'. Pricing young people out of work, while also using taxpayers' money to subsidise a youth jobs guarantee, doesn't make sense. We'd have hoped for a more joined up approach.

"In our most recent quarterly Labour Market Outlook survey, a high proportion of our members lacked the certainty on economic prospects for the rest of the year to make decisions about their next pay award. It isn't clear to us what information the LPC have that gives them greater certainty and confidence. As such we fear they're jeopardising the jobs recovery with these increases, which will also create upwards pressure on wages above the minimum wage - further exacerbating the impact on jobs." specialise in flat fee engineering recruitment for businesses looking to expand and hire

And Dr Adam Marshall, Director of Policy and External Affairs at the British Chambers of Commerce (BCC), said: "It is astounding that the Government would increase the minimum wage by 2.2% at a time when private sector wages are virtually flat, and companies across the country are still making tough choices to keep as many people in employment as possible. While the recession may be over, the jobs market will remain tough for some time to come.

"A near-doubling on last year’s increase is even more astounding. Combined with next year’s rise in employer National Insurance Contributions, a minimum wage that’s a 'one-way bet' could stop some businesses taking on new workers."

This article was produced by Recruitment Today and can be found, here

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