The Forum of Private Business has written to the Chancellor to seek assurances that there will be no unexpected acceleration of the living wage timetable.
Feedback from Forum members indicates that the impact of increasing the minimum wage still further in April 2016 will be devastating for businesses, particularly those who work in labour intensive industries such as hospitality, retail or care as well as those who are looking to employ their first few employees.
Ian Cass, MD of the Forum said: “We were caught unawares by the announcement of the National Living Wage in the July Budget and owe it to our members to ensure that this does not happen again.
“It is not clear what changes the Chancellor will make to the reduction or tampering of Tax Credits but it is important that additional costs are not put on small and medium-sized employers to pay for these changes.
“Recent research from the Forum showed that in 2104/5 the cost of employment was the major increase in small business inflation and that 37% cannot pass these savings on to their customers meaning that such increases directly impact on the ability of a small firm to invest and employ.”
The letter highlights the fact that the Forum supports wage increases when they are sustainable, in other words when they are introduced as a result of improved profits. In this case this rise cannot be sustained in a number of sectors and the Forum has urged the Chancellor to cut the costs of doing business at the same time as the rises.
Mr Cass added: “Compliance costs for employers with fewer than 10 people are around £3,000 per person – that is the same cost as their entire Employment Allowance. Reducing the level of compliance so that businesses can be more productive is now imperative. Without such cuts, it is hard to see how employment costs can be reduced.”