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CBI "crying wolf on living wage" says union
The GMB union is accusing the Confederation of British Industry of yet again "crying wolf" over the impact the incoming National Living Wage is likely to have on companies, just like it did when the National Minimum Wage was introduced.
"When the national minimum wage was introduced, the CBI predicted that there would be substantial job losses but the number of jobs has grown by 3.9 million jobs since then," says the GMB, commenting on the recent CBI warning that a living wage will hit profits and jobs.
In the July 2015 budget the Chancellor announced the introduction of a new compulsory National Living Wage for working people aged 25 and over, starting in April 2016 at £7.20 an hour and reaching £9.00 an hour by 2020. It was also announced that the Low Pay Commission recommends that future rises in the National Living Wage should reach 60% of median earnings by 2020.
"The incoming new director general of the CBI should consider adopting a wolf in its coat of arms to pay homage to the long history of this organisation for crying wolf," argues Brian Strutton, GMB National Secretary. "This troupe of private sector companies bleating about having to pay a fairer wage to their staff is reminiscent of their predictions of Armageddon when the National Minimum Wage was first introduced 1999. They predicted there would be very substantial job losses. The number of jobs has actually grown by 3.9 million jobs since then.
"The same CBI also pressed for the UK to join the Euro. Thankfully the Government ignored them on this.
"The CBI has a track record of exaggeration and they are exaggerating now on a living wage. The fact is that the taxpayer has been funding employers who pay low wages and that has got to stop. Where there is a genuine shortfall as in the care sector and other parts of the public sector that rely on public funding through budget stricken local authorities - the comprehensive spending review will need to address this urgently to avoid catastrophic failure."
Brian Strutton is responding to an article in yesterday's Financial Times, in which Paul Drechsler (pictured), the new CBI president, is quoted as saying that ministers have underestimated the dramatic impact of the National Living Wage on companies' profitability and hiring, and badly timed its introduction - and that one big company has warned him that it would wipe out all its profits.
It appears that Paul Drechsler is not alone, with the Federation of Small Businesses having warned on Tuesday that the rise in the National Minimum Wage was affecting recruitment and growth prospects, recruitment company Manpower revealing that its survey of 2,100 employers suggested that many were scaling back recruitment plans with some blaming the increased minimum wage, and the Office for Budget Responsibility estimating that the extra costs to employers could mean up to 60,000 job losses...
The article quotes the Trades Union Congress stance that the introduction of the minimum wage in 1999 was accompanied by similar warnings from business about its negative impact on jobs but that employment rates went on to hit record levels, with Nicola Smith, TUC head of economics, saying:
"There is no future for Britain as a bad pay, bad jobs economy. Higher pay is good for business and good for growth. Trade unions stand ready to work with employers and government to achieve the productivity gains that we know will deliver both employment growth and higher earnings."
Paul Drechsler also expresses doubts about the efficacy of the apprenticeship levy, whereby all large employers will have to pay a percentage tax on their payroll to fund Britain's apprenticeship system.
"We need every firm in this country playing their role in apprentice opportunities and I'm not sure that a levy system works," he says.
10th September 2015