THE MINIMUM wage boost coming next week should be delayed to stop firms going under, experts have warned.
The Resolution Foundation think tank warned the planned rise to from £8.21 to £8.72 on April 1 was a threat to businesses coming during a pandemic.
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Announced in the budget, the increase will hand a pay rise to over two million workers.
Now a new report today has called for the raise to be delayed and say it would lead to job losses at already struggling businesses.
Nye Cominetti, Senior Economist at the Resolution Foundation, said: “Increasing cost pressures for low-paying firms directly affected by the Government lockdown risks pushing them towards making job losses – something we all want to avoid.
“The Government should therefore announce a six-month delay to the upcoming National Living Wage increase.
“This could provide welcome respite for firms in hard-hit sectors like hospitality and leisure, and give them another reason to hold onto staff during this deep, but temporary, economic crisis.
“Firms unaffected by the crisis can – and should – continue to go ahead with the higher rate.”
Experts have already warned a million jobs could be lost due to the outbreak.
The Foundation explained low-paying sectors such as hospitality, leisure, travel and retail were most affected by the crisis, and therefore less able to pay more in wages.
One in five minimum wages workers are in the hospitality industry, which has been completely grounded by the government lockdown.
They added announcing a delay is unlikely to affect many low-paid workers at booming businesses, but could offer much needed relief for low-paying firms at the heart of the economic crisis.
The pay rises in full
- 25 and over: £8.21 to £8.72
- 21-24: £7.70 to £8.20
- 18-20: £6.15 to £6.45
- Under 18: £4.35 to £4.55
- Apprentice: £3.90 to £4.15
It comes after the government announced a bumper package to support British workers.
The Chancellor Rishi Sunak promised to cover 80 per cent of workers’ wages up to £2,500 a month through grant funding – worth as much as £30,000 a year per employee.
It would cover earnings backdated to March 1 and be open for at least three months with “no limit” on the amount of funding available
In support of businesses and workers Mr Sunak wrote a blank cheque by also announcing:
- Universal Credit standard allowance is to increase by £1,000 a year for the next 12 months
- Working tax credit is to increase by £1,000 a year
- Self assessment tax return deferred to January 2021
The Government is also pledging nearly £1 billion for renters through increasing housing benefit and Universal Credit.
His announcement came on the back of a £330 billion coronavirus loan scheme for businesses to access, which was announced by Mr Sunak on Tuesday.
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