Employers warn of risks from wage, skills levy

London, December 21

Britain’s government risks intervening too much in the job market with a higher minimum wage and a new levy to fund apprenticeships, which could threaten the country’s economic growth prospects, an employers’ group said.

“The government must be careful not to sacrifice prosperity for political expediency by saddling businesses with costs that could harm investment, which is critical to increasing productivity,” said Carolyn Fairbairn, director-general of Confederation of British Industry (CBI).

Just over half the services firms that took part in a CBI survey said they would raise their prices, and 27 per cent said they would employ fewer workers after the higher minimum wage is introduced in April.

On the apprenticeship levy, only one in six companies said it was the right approach to fixing Britain’s skills shortage. Almost half said it would be costly and bureaucratic, the CBI said as it released the survey today.

Finance Minister George Osborne announced new minimum wage for workers aged 25 and over in July, bypassing an independent commission which usually sets its level. By end of the decade, it will represent an hourly pay rise of 40 per cent for the lowest-paid workers.