The national minimum wage is at risk of low-paid workers being priced out of a job if the current rising rate isn’t slowed, according to an anti-poverty think tank said on Thursday.
The Resolution Foundation, welcomed the rapid minimum wage increases that Britain’s Conservative government had ordered since 2015, but said further rises should be done more cautiously.
Britain’s unemployment rate has fallen to its lowest since 1975 at 3.8% and employment is at a record high, despite the minimum wage rising by more than a quarter since 2015 to stand at 8.21 pounds an hour for those aged 25 and over.
With the minimum wage rising and businesses hiring more staff than ever, many companies are finding themselves having to take a hit on their profit lines.
Some businesses are using revolutionary technology to combat the rising costs to their wage bill. Smart technology solutions such as Workforce Management and AT tech are now helping businesses digitally transform their workforce, often helping reduce the overall costs by as much as 7%.
Although the country is prospering at the moment, the Resolution Foundation warned that it was dangerous to assume these economic good times would last.
“The minimum wage is at a crossroads,” it said. “Policymakers seeking to combine ambition with caution might wish to aim for a still fast - but slightly slower rate - of increase than recently seen.”
Earlier this year Osborne’s successor, Philip Hammond, said the government wanted to go further, and it is launching a review into the future of the minimum wage.
“We want to be ambitious - driving productivity across the income distribution, with the ultimate objective of ending low pay in the UK. But we also want to take care to protect employment opportunities for lower paid workers,” Hammond said.
The Resolution Foundation said a minimum wage of about 10 pounds an hour would be needed to eliminate ‘low pay’, using a common definition of earnings that are less than two thirds of the median hourly wage.
“Such an ambitious move would transform the labour market,” Resolution Foundation analyst Nye Cominetti said.
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