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Minimum wage hike – can we really afford it ..... ?

20 January 2014

George Osborne said that he wants to see above-inflation increase in the national minimum wage, increasing the hourly rate from £6.31 to £7 an hour by 2015 for over 21s.

Whilst many people will support the Chancellor’s plans, not everyone is in favour of them. Trade associations have warned that the above-inflation increases will hurt small businesses despite George Osborne stating that the UK economy “can afford” to increase the national minimum wage.

ACS chief executive, James Lowman has warned that the increase will lead to three outcomes in local shops: cutting back on hours for existing staff, stopping plans for investment and pressure on business owners to take on more work themselves. Minimum wage increases would also affect other employment costs like pension and tax contributions.

My question is whether the Chancellor really just ‘wants living standards to go up’ or are his plans more politically motivated which may in my view have the potential to cause more harm than good to the economy.

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