Chancellor to ask Low Pay Commission to consider minimum wage rise

Christian Spence, Research Manager at Greater Manchester Chamber of Commerce

The Chancellor of the Exchequer has decided to request the Low Pay Commission to consider an above inflation rise in the National Minimum Wage.

Commenting on the decision, Christian Spence, Head of Business Intelligence at Greater Manchester Chamber of Commerce said: “The Chamber of Commerce’s recent Quarterly Economic Survey revealed that 80% of our member businesses believe that the National Minimum wage should increase this year by at least inflation with 16% saying that it should rise by more than inflation, compared to 13% that think it should be frozen.

“There is an important balance to be struck between moderating the increased costs of doing business with wider social responsibility.

"The Chamber of Commerce has welcomed the government’s economic plans to reduce the deficit and better manage the public finances. A crucial part of this is ensuring that work pays and the 4% of the population who are paid the National Minimum Wage have seen their pay fall behind inflation since 2010.

"As the economic recovery is gaining ground and we expect to see employers moving to real terms increases in pay awards over the coming year, there is a sound argument for ensuring that the lowest benchmark income moves in the same way.

“It must be stated though that despite what the Chancellor announces it is the job of the Low Pay Commission to set the rate of increase for the National Minimum Wage.

"Should the decision be to make an inflation plus increase then we would call upon the Chancellor to consider measures such as reducing employers’ National Insurance contribution to at least share, if not wholly remove, any burden caused by an increase above inflation.

“Whilst our research shows the economic recovery is gaining strength for some businesses difficult trading conditions persist and for some any increase could have an adverse affect. It is important that the recovery is not harmed as longer term this will ultimately cause deeper problems.”