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British business chiefs urge minimum wage freeze

(Agencies)
Updated: 2008-12-29 16:51

LONDON -- A top business leaders' network said Monday it was calling for the national minimum wage not to be increased in 2009 due to the faltering state of the economy.

Commuters walk home near Tower Bridge in central London. A top British business leaders' network has said it is calling for the national minimum wage not to be increased in 2009 due to the faltering state of the economy. [Agencies]

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The British Chambers of Commerce (BCC) has written to the Low Pay Commission public body, which advises the government on the rate, saying it should remain at current levels until economic conditions had significantly improved.

The minimum wage stands at 5.73 pounds (8.42 dollars, 5.95 euros) an hour for adults, 4.77 pounds for 18- to 21-year-olds and 3.53 pounds for 16- and 17-year-olds.

An increase in 2009 in line with the 2008 rise introduced in October would cost businesses 300 million pounds, said the BCC, the national body for a powerful and influential network of accredited chambers of commerce.

As Britain slides into recession, many hard-pressed firms would be unable to afford such a rise, the BCC said.

"We're not opposed to the minimum wage going up when employment is high and the economy is doing well," said BCC director general David Frost.

"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."

The BCC is forecasting that three million people will be out of work by 2010.

The number of people claiming jobless benefits in Britain leapt in November by the biggest monthly amount for more than 17 years, official data showed, soaring by 75,700 from October to 1.07 million people.

Meanwhile, the Chartered Institute of Personnel and Development (CIPD) warned that 2009 could be the worst year for jobs in two decades, with 600,000 workers facing redundancy and others having their pay frozen.

The employment organisation, which represents managers and personnel staff said that the period between New Year and Easter would be the worst for redundancies since 1991.

The next 12 months "will be the worst year for jobs in almost two decades," said CIPD chief economist John Philpott.

"The CIPD's annual barometer forecast is that the UK economy will shed at least 600,000 jobs in 2009.

"Assuming the economy bottoms out in the second half of 2009, job losses are likely to continue into 2010, in all probability taking the final toll of lost jobs to around one million.

"Our current expectation, based on available survey evidence and employer soundings, is that the number of redundancies will jump sharply in the early months of 2009, once employers take stock of the economic outlook."