Federation of Small Businesses asks for fundamental reform of the National Minimum Wage

The Federation of Small Businesses (FSB) has publicly asked the Government to develop and implement a fundamental reform of the National Minimum Wage in order to make it more predictable both for businesses and workers.

According to a media report on this topic, the FSB argued that the current scheme, where the Low Pay Commission (LPC) advises Government on changes to the minimum wage each year but doesn’t offer any future guidance beyond that point, provides a significant level of uncertainty for up to 4.9 million businesses across the UK, preventing them from planning ahead on longer periods of time and holding back investment.

While the FSB expressed its support both for the concept of National Minimum Wage the LPC, they nevertheless argued that the Low Pay Commission should try to take a longer term approach to these recommendations, perhaps over a 5-year period. In this way, all businesses will be able to set multi-annual investment and development plans, based on predicted evolutions in the minimum wage.

John Allan, national chairman, Federation of Small Businesses, said: “Setting an appropriate minimum wage, which helps to stem the fall in real wages without harming employment, is crucial. The Low Pay Commission has a great track record, but the time has come to reform radically the way the National Minimum Wage is set.

“Businesses need greater certainty of the future value of the minimum wage and that is why we are calling for a new, longer-term approach.”

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