The CBI has urged the Low Pay Commission to show restraint when it comes to increasing the National Minimum Wage (NMW).

And after last week’s row with the British Retail Consortium, the TUC has welcomed the CBI’s submission – but said it could go further.

In its submission, the CBI warns that rising energy costs, lower 2007 growth forecasts and the increasing cost of employment regulation mean that the economy simply cannot accommodate further heavy minimum wage rises.

Susan Anderson, CBI Director of HR Policy, said: “The minimum wage has improved living standards for many workers, but continuing heavy annual increases are simply not sustainable, as the Low Pay Commission itself acknowledges.

“Firms are already under great pressure from rising energy costs, lower-waged competition overseas, and an uncertain global economic outlook.

“Others are being undercut by a minority of unscrupulous employers who take workers on the black market to avoid paying the minimum wage.

“We hope that this year the rise will be more modest, so that employers can consolidate the costs to date, and restore the vital differentials in pay that have been flattened by the minimum wage which encourage people to train and take on extra responsibilities in the workplace.

“Employers support the minimum wage and it must not be left to wither on the vine, but increases must be more affordable.”

TUC general secretary Brendan Barber said: “The CBI has sensibly scrapped its call for freezing and effectively neutering the minimum wage and is once again calling for affordable increases.

“British business has comfortably been paying a growing minimum wage and given the positive economic outlook for the next two years, a minimum wage of over £6 by 2008 should be easily affordable.

“The CBI is right to attack bad bosses in the cash-in-hand economy who undercut good employers by paying as little as £1 per hour but they need to go further. I look forward to employer groups supporting our calls for tougher enforcement of the minimum wage including the naming and shaming and even imprisonment of rogue employers.”

The TUC is calling on the CBI to sign up to the following measures to strengthen enforcement of the NMW, included in its own submission to the Low Pay Commission:

• More funding for HM Revenue and Custom’s (HMRC) enforcement work and joint enforcement projects with other government agencies.


• More prosecutions of employers avoiding the NMW and repeat offenders to be named and shamed.


• The maximum fine for minimum wage offences is currently £5,000, this should be increased substantially and there should be the option of imposing a prison term on rogue employers.


• HMRC should be able to pursue cases of detriment – where a worker is picked on for claiming the NMW: this treatment is illegal at the moment but can only be enforced by an employment tribunal.


• Interest to be paid to workers on arrears of the minimum wage (Low Pay Commission recommendation 2005.)


• Tighter regulation of employment agencies to crack down on abuse of workers’ rights.


• Third parties complaining about minimum wage abuses, such as trade unions or community groups, should have the right to be informed of the outcome of their complaint.


• All benefit and tax credit applications from workers should be checked for compliance with the minimum wage.


• The minimum wage for seafarers should be enforced and the existing loopholes closed off.


• There should be a stronger role for trade unions in enforcement in order to protect vulnerable workers. This would include allowing unions to bring employment tribunals cases directly against employers, at the moment cases can only be brought by individual employees.