The Great Business Debate is a conversation about the difference business makes to people’s lives. And in the headlines today, the big questions were about wages and the money that firms put in our pockets.
Speaking to the Labour Party’s annual conference today in Manchester, Shadow Chancellor Ed Balls made commitments to balance the books, cut Ministers pay, and cap child benefit. But the pledge that caused the biggest stir was the promise that a Labour government would raise the National Minimum Wage to £8 an hour by the end of the next parliament.
He argued there is a “need to change the way our economy works… Because while our economy is growing again most working people are still not seeing any benefit from the recovery”.
It’s widely recognised that the growing economy has not yet led to the increase in wages that will end the long squeeze on living standards, but not everyone agrees that a political decision to raise the National Minimum Wage is the right way to tackle the problem.
For some, like The Joseph Rowntree Foundation, the announcement was welcomed as a “first step in reducing the UK’s in-work poverty problem”. But a tweet from the Liberal Democrat Party suggested that average rises would mean that the minimum wage would be at least £8 an hour by 2020 without political interference.
And business groups responded by expressing their concerns for jobs if the minimum wage rose without taking into account firms’ ability to pay. The Federation of Small Businesses told the FT that a minimum wage of £8 an hour was a “huge ask” for smaller firms. The CBI urged politicians to remember that the minimum wage “is set at the highest rate it can be without putting job creation at risk… raising wages in this way would put serious strain on businesses, particularly hard-pressed smaller firms with tight margins, which would end up employing fewer people”. Instead, the CBI asked politicians to look at how people move on in their careers into higher paying roles with the help of training and better skills.
So what do you think? Is raising the National Minimum Wage the right way to higher living standards? Should businesses be taking more of a leadership role in finding ways to raise pay sustainably? Or is the answer to focus on training and skills development to help people move up the career ladder and into better paid jobs? Let us know what you think on social media using #bizdebate