Firms’ concern over wage rise

Sep 23 2008 by jez Davison, Evening Gazette

THE ISSUE:

SMALL firms could face prosecution and fines of up to £5,000 if they fail to comply with the latest increase in the national minimum wage.

From October 1, the minimum wage will rise by 21p to £5.73 per hour for workers aged 22 and over, while those aged 18 to 21 will see their hourly rates boosted by 17p to £4.77.

Critics have slammed the Government for putting a further burden on cash-strapped company finances. Bosses have seen a 59% rise in the minimum wage since it was introduced (at £3.60) in 1999.

Meanwhile, others are set for a rude awakening when the law comes into force.

Research by Bibby Financial Services showed that 31% of small firms did not know about the forthcoming change, while a survey by the Forum of Private Business (FPB) said 44% of companies employing four staff or fewer were unaware of it.

The minimum wage was introduced to stamp out exploitation of workers and put businesses on a level playing field. The government claims that prior to 1999, some workers in the UK were being paid as little as 35p an hour.

THE REACTION:

STOCKTON care home entrepreneur Angela Swift is aware of the latest rise and believes it will help staff fight the spiralling cost of living.

She says: “Utilities, food and fuel bills are going up and staff need the extra money to pay for these rises.”

Joel Kerr, of Joel D Kerr Funeral Service in Hartlepool, praises the Government for pitching the minimum wage at the right level.

“People need to be able to afford to eat,” he says. “But it shouldn’t go up too much otherwise it could price companies out of employing people.”

But Mark Jones, manager and head chef at the Ocean Restaurant in Seaton Carew, said the move would spark wage pressures elsewhere in the business.

“There will be a knock-on effect. Staff on the pay level above the minimum wage will want a rise, and so on.”

He claims the increase will do little to incentivise staff or help companies retain their best workers.

“You look after your good staff anyway,” he says.

Chris Appleby, owner of the Cleveland Hotel in Redcar, said the rise wouldn’t have a major impact on his business as the majority of his eight staff were paid more than the minimum wage.