Page last updated at 17:20 GMT, Sunday, 28 December 2008

Firms urge freeze on minimum wage

Wage packet with cash
The minimum wage was last increased in October

Business leaders have called for the national minimum wage to be left at the current levels in 2009 amid the economic downturn.

The British Chambers of Commerce (BCC) said it believed the minimum wage should not be increased until economic situations had significantly improved.

BCC said that an increase similar to the 2008 rise would cost firms 300m.

The minimum wage for employees over 21 increased by 3.8% in October to 5.73 per hour.

It is 4.77 for workers aged between 18-21 and 3.53 for staff aged 16-17.

A rise in minimum wage would not help firms hold onto staff and would simply add to unemployment
David Frost, British Chambers of Commerce

However, critics call for the minimum wage to be increased, saying that minimum wage earners find it difficult to get by and have to take a second job or work overtime just to afford to live.

But BCC director general David Frost said: "We're not opposed to the minimum wage going up when employment is high and the economy is doing well, but when jobs are being lost daily and a recession is in full swing, it makes no sense to increase it."

"Most businesses are prioritising survival at the moment. A rise in minimum wage would not help firms hold onto staff and would simply add to unemployment."

BCC has forecast that unemployment will reach three million by 2010.

Mr Frost also said: "First of all, employers talked of pay freezes, but in the last two weeks directors have started talking to me about reducing pay next year."

"This shows how bad things have got - nothing is now off limits. If this keeps more people in work, it's surely the better of two evils," he told the Sunday Times.



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