Workers get deserved pay rise, but minimum wage cannot become political “instrument”

Business leaders respond to Low Pay Commission consultation, closing Friday.

The Institute of Directors has cautiously welcomed the Chancellor’s new national living wage, which will see the hourly rate for over-25s hit £7.20 next April, but called for care to be taken over future minimum wage rises. The comments were published in the IoD’s response to the Low Pay Commission’s consultation on minimum wage rates, which closes today [Friday].

Seamus Nevin, Head of Employment and Skills Policy at the IoD, said:

“In many ways, the UK has a good jobs story to tell. Unemployment is low and vacancies are at a near record high. But one of the biggest disappointments of the recovery has been slow pay growth for workers. The Chancellor has decided that now is the time to reward employees for their patience during the recovery and has offered businesses a lower tax deal in return. 

“IoD members already recognise the benefits of letting their staff share in their success. 9 out of 10 pay the full living wage, as set by the Living Wage Foundation, so they will mostly be able to accept the Chancellor’s bargain. Nevertheless, Government cannot ignore the potential jobs cost, especially in the hospitality, retail and care sectors. 

“The minimum wage must not become a political competition to see which party can offer the most, irrespective of what the economy and employers can afford. The independent Low Pay Commission has done a good job in balancing the rate against inflation, economic growth and the effect rises would have on small businesses and people entering the jobs market. The Chancellor must resist the temptation to turn the new National Living Wage into an instrument of political strategy. 

“Ultimately, the only way to ensure sustainable pay rises is to increase the productivity of the workforce and the performance of our companies. In that regard, businesses are keen that the Chancellor must come good on his part of the ‘deal’ struck in the summer Budget and deliver on promises to cut corporation tax and raise the Employment Allowance sooner than later.”

The full consultation can be downloaded here.

• The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with approximately 35,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, professional services to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.

• The IoD provides an effective voice to represent the interests of its members to key opinion-formers at the highest levels. These include Government ministers and their shadows, parliamentary committee members, senior civil servants and think-tanks. IoD policies and views are actively promoted to the national, regional and trade media.

• The IoD offers a wide range of business services which include business centre facilities, with 15 UK centres (including three in London, Belfast, Cardiff, Edinburgh, Birmingham, Manchester, Leeds, Nottingham, Reading and Norwich), and one in Paris, conferences, networking events, virtual offices, issues-led guides and literature, as well as free access to business information and advisory services. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – and also runs specific board and director-level training and individual career mentoring programmes.