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Cumbria Chamber of Commerce: “Soaring Minimum Wage will Hurt Businesses”

Rob Johnston

[C]umbrian businesses are already cutting back on recruitment because of steep increases in the National Minimum Wage, and some warn they could be forced to close entirely.

Cumbria Chamber of Commerce conducted an online survey ahead of the annual increase, on April 1, when the hourly rate for over-25s jumps by 4.4% to £7.83.

The Chamber’s Chief Executive, Rob Johnston, said: “Our survey reveals that some businesses are already under pressure because of increases in the Minimum Wage, and they are likely to respond to future increases by curtailing recruitment, cutting staff numbers or reducing staff hours.

“If the Government continues to impose above-inflation increases, jobs will be lost.”

He added: “The Minimum Wage shouldn’t be seen in isolation. The latest increase coincides with the doubling of employers’ auto-enrolment pension contributions and the annual index-linked rise in business rates. It’s yet another up-front cost that businesses are expected to absorb.”

The National Minimum Wage was introduced in 1999 at £3.60 an hour. The rate for over-25s became the known as National Living Wage in 2016, set at £7.20. It could hit £9 by 2020.

This is a big concern for some businesses.

One told the Chamber: “We are now at the point where the National Living Wage may put us out of business.”

Another said: “With the planned increases, we don’t see ourselves in business in five years’ time.”

When the Chamber asked businesses how they had responded to previous increases, 16% said they had reduced staff hours, 20% had reduced employee numbers, 28% had frozen recruitment, and 4% had curtailed staff perks or benefits.

Several cited the pressure on pay differentials when the lowest-paid staff receive above-inflation increases.

One business said: “This has caused a great deal of anxiety as the pay gap between low skilled manual workers narrows with supervisors and staff with more responsibility.

“It has caused a ripple of higher pay awards up the ladder and is now in danger of making the business not viable.”

The Low Pay Commission, which advises the Government on the level of the Minimum Wage, is due to visit Kendal in April as part of a nationwide tour to gauge the impact on businesses.

It chose Kendal because the proportion of workers in South Lakeland that are paid at the Minimum Wage level is 12.1%, almost double the national average.

Cumbria Chamber of Commerce plans to meet the Commission to submit the findings of its survey.

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