WA54

Minimum wage hike "could damage UK firms"

The Confederation of British Industry has warned that the October increase in the national minimum wage could hinder many UK businesses.

According to a CBI poll, 25% of firms expect the rise to have a negative impact, with those in the service sector expressing the most concern.

From 1 October 2004, the main hourly rate (for workers aged 22 and over) increases from £4.50 to £4.85.

The development rate (for workers aged 18-21, or those receiving accredited training with a new employer) also rises from £3.80 to £4.10.

A new minimum rate for 16 and 17-year-olds also comes into force, at £3.00 an hour.

John Cridland, deputy director-general of the CBI, said that the increase will have a knock-on effect for employers, by pushing other salaries higher.

The CBI has pledged to monitor the effect of the increases.

'We are putting out a storm warning that between October and Christmas we will find out whether the Government has overdone it', said Mr Cridland.

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