This is among the findings of the CBI/Harvey Nash employment trends survey 2009, which is based on responses from 243 employers, with a combined workforce of more than half a million.
More than one in five (22%) respondents were affected by the 2009/2010 national minimum wage increase, which came into effect on 1 October 2009. Of these, just under one in five (17%) said "the rise could lead to a reduction in the number of employees to offset higher costs and/or raise productivity". And more than one in three (37%) say "this year's rise could cause them to increase the price of their products and services."
The CBI also finds that the comparatively low national minimum wage increases implemented in the previous two years (the adult rate rose by 3.2% in 2007, and by 3.8% in 2008) have also made things harder for employers. According to the report:
The results suggest the effect of the two moderate rises in the national minimum wage in 2007 and 2008 has been to maintain, not reduce, the bite of the minimum wage.
The CBI therefore argues that future national minimum wage increase decisions should take greater account of their impact on employers. It says:
The survey shows that national minimum wage rates typically have a much wider effect than simply raising the pay of the lowest paid. This year's survey highlights the fact that the LPC must exercise extreme caution when considering any uprating of the minimum wage for 2010/11.
Attention is already turning to what we can expect from the 2010/2011 national minimum wage increase, which will come into effect on 1 October 2010.
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