Pensions

Businesses complain of rising costs from legislation

Bosses have complained that government interventions are increasing the cost of doing business in Britain, in a survey by the British Chambers of Commerce (BCC).

The trade body even went as far as to suggest policies like pensions auto-enrolment, the national living wage and the apprenticeship levy are threatening firms’ “ability to raise wages” at a time when real pay is in decline, says the Financial Times.

“About 80 per cent of the 1,400 companies surveyed … in July said their costs had gone up this year” as a direct result of new employment legislation, says the paper.

Seventy-five per cent of firms surveyed said new obligations to auto-enrol employees in a pension scheme had increased costs and 50 per cent said the higher legal minimum wage for those aged over 25 had added expense.

Another 20 per cent of reported the apprenticeship levy had hit their bottom line.

To combat this, 38 per cent of firms said they planned to up prices, 25 per cent to reduce overall wage rises and a fifth to cut staff benefits or ease off on hiring.

The BCC said it wants the government to ensure no new upfront costs or taxes are imposed on businesses for the remainder of this parliament.

Some may suggest the figures prove the worst-case scenario predicted as a result of the living wage – in particular, mass job losses – has not come to pass. In fact recent surveys and official employment statistics suggest firms are still hiring apace.

Even the threat of reduced wage rises has to be taken in context of forced wage rises for the poorest workers, who have seen their real pay decline since the financial crisis.

Last October, official figures showed a six per cent rise in the lowest wages, mostly thanks to the living wage, has reduced wage inequality.

Kathleen Henehan, a policy analyst at the Resolution Foundation, told The Independent:

“The need for urgent policy action to tackle low pay and our historical failure to invest in skills for the next generation is very real.”

She added: “That’s why government moves to raise the minimum wage and introduce the apprenticeship levy are the right thing to do, even if they aren’t totally risk free.”

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