UK: London's Leading Business Advisers Give Cautious Reaction To Minimum Wage Rise
Last Updated: 4 May 2001
Article by Mr Richard Morris

London's leading business advisers' have given a cautious reaction to the government's announcement that the Minimum Wage is set to rise from £3.70 to £4.10.

Richard Joseph, Chairman of the London Society of Chartered Accountants' (LSCA) said:

"A rise of around 11 per cent is higher than many businesses will both expect and believe they can cope with.

"Less efficient firms will find it difficult to sustain such an increase and there is no doubt this will have some impact on business survival and consequently on jobs, particularly in London's retail and social care sectors.

"In the social care sector in particular, where margins are extremely tight, only the leanest companies will be in a position to absorb an 11 per cent pay increase, and their reaction, under pressure from government to meet budget targets, will be to cut jobs.

"We are also fearful that such a rise will put pressure on pay settlements over the next few months for those firms directly affected and for those in related sectors, as employees earning above the minimum wage look for comparative increases."

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