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29 May 2019

Minimum wage review must consider spiralling costs, say small firms

Ahead of tomorrow’s launch of Arin Dube’s government-commissioned review of minimum wage rates, Federation of Small Businesses (FSB) National Chairman Mike Cherry, said:

“Over 90 per cent of small businesses have maintained pay levels or increased them over the past year. Small firms tend to be ahead of the curve on pay: six in ten were paying all employees at least the National Living Wage rate for last year prior to April.

“However for some small businesses – particular those in sectors with lower levels of pay and tight margins such as social care – wage increases do take their toll. Firms are having to cut profitability, hold back investment and put up prices to absorb them. This review must recognise that fact.

"Small businesses are also contending with rising business rates, increasing pension costs and higher input costs due to a weakened pound. For firms in the retail, hospitality and care sectors in particular, these burdens are threatening futures.

“It’s important to remember that wage increases are one of many government interventions that have collectively added £60,000 to the average small business cost of doing business since 2011.

“Therefore it is essential that increases in the NLW are affordable for smaller businesses and do not have a chilling effect on economic growth.”