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Chamber fears backlash from rise in National Minimum Wage
MORE than one in three companies have had to increase their wage bills since the introduction of the National Living Wage earlier this year.
Many have also amended their recruitment plans, with one in ten shelving plans to add new staff and others planning to do so if the NLW increases to £9 per hour.
Most businesses already pay above the minimum £7.20 per hour and are unaffected but just under a quarter of those affected by the NLW have seen their wage bill rise.
The figures come from a survey by Northamptonshire Chamber of Commerce, in conjunction with its parent body the British Chambers of Commerce, of more than 200 business leaders across the East Midlands.
It also reveals that, of the firms whose wage bill increased because of the NLW, most have not yet made major changes.
Only 18% of businesses affected by the NLW raised prices to offset the cost but 39% would do so if it rose to £9 by 2020. The action will take the form of reductions in recruitment, staff hours, pay increases and staff benefits.
Northamptonshire Chamber chief executive Paul Griffiths said: “A decent wage can make a huge impact on employees’ lives and their performance at work and most businesses are able to pay above the NLW.
“However, a significant number of firms have already had to rebalance their books to meet the cost of the NLW, which can have a knock-on effect on recruitment or growth plans. Many firms would have to change their business models by increasing prices and reducing staff if the NLW increases to £9 per hour by 2020.
“The government needs to take an evidence-based approach to setting the NLW. The rate should be set by the Low Pay Commission and be determined by the state of the economy, weighing up the various pressures businesses face.
"Further NLW increases need to be proportionate, reflecting business uncertainty, slowing growth and high input costs, to avoid having a negative effect on employment.”
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