Should small businesses fear the minimum wage “increase”?

The majority of mainstream titles are currently lauding the change, coming into effect in October, as "unwelcome" and "illogical". However, they aren't highlighting that, in a year when inflation has averaged above 2.8%, the rise of 1.9% is not an increase in real terms.

The 12p an hour increase would mean that, for every full time employee who was earning £6.19 per hour before the change, a business would have to pay £234 more per year.

This figure sounds intimidating, but with inflation expected to push prices up by more than 3% in the coming year, businesses should see revenues increase enough to cover the higher wages.

Apprentices

The Government followed recommendations from the Low Pay Commission when bringing in this increase, as well as smaller increases for the National Minimum Wage at younger levels. However, the 1.1% increase in the minimum wage available to apprentices went against advice for a freeze on the level.

Under this change, full time apprentices who previously earned £2.65 per hour will receive £59 more a year from their employer.

We appreciate that any increase in costs can be difficult for businesses dealing with small margins, but feel the National Minimum Wage is positive signal of the way Britain does business and something worth maintaining, even in difficult economic times.

What do you think? Will this increase harm your business? Will it prevent you from hiring more staff? Do you agree with the idea of a National Minimum Wage? We would love to hear your views.

 

Images from Bigstock

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