CEO comments on minimum wage increases

It is being reported that the Chancellor will announce an increase to the minimum wage tomorrow.

Below is a comment from the CEO of 365 Finance on why, though the right step, this could be a dangerous move if businesses are not also supported in the Budget.

Warren Abbey, CEO of 365 Finance, said: “People need to be paid fairly. Inflation continues to rise, and energy costs are soaring just as winter approaches. But the government cannot give with one hand and take with the other – it is absolutely right that minimum earnings are driven up, but doing so without also supporting the businesses paying them is a flawed approach, so all eyes will be on tomorrow’s Budget.

“Increases to minimum wage are most likely felt across retail and hospitality – two sectors already facing significant financial pressures, from National Insurance and business rates to energy bills and supplier prices. The danger of higher wages, if not introduced alongside other initiatives that improve trading conditions or alleviate their financial burden, is that businesses respond not by growing, but by postponing recruitment, reducing hours, or passing more costs on to customers.

“Businesses need tax systems that focus on profits, not flat costs, and trading conditions that allow them to invest in their own growth. After all, improving employees’ pay is only a positive if there are employers willing and able to hire them.”