Merlin the Magician
At the Start
LONDON (Reuters) - Over one million workers benefit on Saturday from a rise in the minimum wage with adults getting an extra 20 pence to take the hourly rate up to 5.05 pounds for those aged over 21.
The increase was welcomed by unions but triggered misgiving from some employer groups worried higher wage bills could negatively affect the economy.
The Trade Unions Congress said the extra pay would
make a "real difference, with many hard-up families better off as a result."
The TUC also urged a rise for next year.
"A further increase next year and payment of the adult rate to 18 year olds is easily affordable, and would have no adverse effect upon either the economy or on jobs," the TUC's Brendan Barber said in a statement.
The rate for 18-21 rose to 4.25 pounds an hour.
The Institute of Directors said Saturday's rise was a mistake in the current economic conditions.
"Employers will need to raise the productivity of minimum wage workers by 10 percent over the 2005-2006 period, in order to offset the increase pencilled in for this year and next and keep unit labour costs," the IoD's Chief Economist Graeme Leach said.
"This is virtually impossible in the current economic climate."
He called for a planned 6 percent rise in the minimum wage next year to be rejected when the decision is reviewed by the Low Pay Commission in February 2006.
The Confederation of British Industry welcomed the latest rise, but urged caution about future increases.
"The minimum wage has been successful because it has been set at a rate the nation can afford," CBI Director-General Digby Jones said.
"After the two 7 percent rises of 2003 and 2004, firms will be relieved that this year's 4.1 percent rise is more in line with earning predictions."
But Jones said the rise planned for 2006 would have a detrimental impact on even large employers.
The increase was welcomed by unions but triggered misgiving from some employer groups worried higher wage bills could negatively affect the economy.
The Trade Unions Congress said the extra pay would
make a "real difference, with many hard-up families better off as a result."
The TUC also urged a rise for next year.
"A further increase next year and payment of the adult rate to 18 year olds is easily affordable, and would have no adverse effect upon either the economy or on jobs," the TUC's Brendan Barber said in a statement.
The rate for 18-21 rose to 4.25 pounds an hour.
The Institute of Directors said Saturday's rise was a mistake in the current economic conditions.
"Employers will need to raise the productivity of minimum wage workers by 10 percent over the 2005-2006 period, in order to offset the increase pencilled in for this year and next and keep unit labour costs," the IoD's Chief Economist Graeme Leach said.
"This is virtually impossible in the current economic climate."
He called for a planned 6 percent rise in the minimum wage next year to be rejected when the decision is reviewed by the Low Pay Commission in February 2006.
The Confederation of British Industry welcomed the latest rise, but urged caution about future increases.
"The minimum wage has been successful because it has been set at a rate the nation can afford," CBI Director-General Digby Jones said.
"After the two 7 percent rises of 2003 and 2004, firms will be relieved that this year's 4.1 percent rise is more in line with earning predictions."
But Jones said the rise planned for 2006 would have a detrimental impact on even large employers.