Small businesses have welcomed the Treasury’s renewed efforts to clamp down on firms that fail to pay the minimum wage.
However, they are also concerned that the Treasury has not relieved the pressure on small firms caused by increases in the basic wage for employees.
Gordon Brown announced in his pre-Budget report that the money given to HM Revenue and Customs to track down employers flouting the minimum wage will double to £9m from next April.
Employers will also face harsher penalties if they are caught paying staff under the minimum of £5.35 an hour.
Business organisations have welcomed the prospect of harsher sanctions on law-breaking competitors, but were less enthusiastic over the prospect of future increases.
A spokesperson for the Forum of Private Business (FPB), said: “The measures are encouraging an even playing field.
“However, the main problem is that no steps have been taken to tie the minimum wage to the retail price index.
“Our biggest concern isn’t that competitors are ignoring the minimum wage, it’s the rate at which the minimum wage is increasing.”
“The increases have not been something that small businesses have been able to reflect in prices, so it’s been coming out of their own pockets. This puts even more of a squeeze on profit margins.”
The unions also back the Chancellor’s clampdown on ‘rogue’ firms but highlighted the benefits of the policy to employees.
Brendan Barber, general secretary, said: “The TUC strongly supports the increase in resources for enforcing the minimum wage and tougher penalties for minimum wage cheats.
“Rogue companies who pay below the legal minimum both undercut decent employers and give poverty pay to their workforces.”
© Crimson Business Ltd. 2006
