05 10 2015

Tories’ wage and leave reforms under fire from small businesses

The Conservative Party, gathering for its annual conference in Manchester this week, has come under renewed fire from British business for two of its recent policy proposals – the new national living wage and changes to paternity leave.

New research has found that small firms are planning to slow the pace of hiring and raise prices in response to the living wage.

A Federation of Small Businesses (FSB) survey of 1,261 members found that 38pc of small employers expect the new national living wage to negatively affect their business when it comes into force in April 2016.
When asked to consider the projected rise in the national living wage to at least £9 an hour by 2020, more than half (54pc) said it would hurt them.
John Allan, the FSB chairman, said. “Over half of our members already pay their staff above the voluntary living wage, but those that don’t are often operating in highly competitive sectors with very tight margins. In many of these industries, the only sustainable way to deliver real long-term wage growth is to improve productivity.
“Without improved productivity there is a real risk that higher enforced statutory wages will lead to fewer jobs being created and, unfortunately in some cases, to job losses.”
Separately, business lobby groups have attacked Chancellor George Osborne’s announcement that grandparents will in future be eligible to share leave with working parents.
Adam Marshall, executive director of policy and external affairs at the British Chambers of Commerce, said: “Another change to parental leave policy is the last thing businesses need after a decade of upheaval. The last set of changes hasn’t even bedded in yet, and many firms will be astonished that the government has decided to intervene yet again.”
The Chancellor announced plans in the summer Budget to raise the hourly minimum wage for workers aged 25 and over to £7.20 from next April, from £6.50 today. He also set out a plan for it to rise to £9 by 2020.
The FSB estimates that for a small retail business with six full-time staff aged 25 or over and earning the current adult minimum wage, the national living wage will cost an extra £5,900 a year from April 2016.
When Mr Osborne announced the changes in July, he promised extra help for small firms in the form of increasing the new Employment Allowance by 50pc to £3,000.