Minimum wage raised to £5.80 an hour – more trouble for small businesses?

The Government has announced plans to raise the minimum wage by 7p to £5.80 an hour later this year.

For 18-21 year olds the minimum wage will increase by 6p to £4.83, while for 16 and 17 year olds it will be raised by 4p to £3.57. Business Secretary Peter Mandelson said of the change:

"The Low Pay Commission (LPC) has carefully examined the latest economic data before making their recommendations on the minimum wage rate, balancing the needs of workers and businesses in the current economic climate.

"The government agrees with this assessment and has accepted the recommendations for these new rates to take effect in October."

The move is bound to prove controversial with many small businesses. To relieve the financial pressures currently facing Britain's struggling businesses, the British Chambers of Commerce (BCC) has frequently called on the Government to hold off any wage increase until the economic situation improves. David Frost, director-general of the British Chambers of Commerce, commented:

'We are pleased that the increase is only a modest one, and it shows that the Low Pay Commission and the Government have largely understood the seriousness of the situation. However, a freeze would have been more help to business."

12/05/09