Minimum wage rise could lead to job losses

Posted on 18 May 2017 and read 371 times
Minimum wage rise could lead to job lossesA report by the Institute for Fiscal Studies (www.ifs.org.uk) has warned that Labour and Conservative plans to raise the National Minimum Wage (NMW) could lead to a loss of jobs.

A spokesman for the Labour Party said: “Our £10 an hour NMW plan is in line with reputable forecasts of the wage needed to maintain a decent standard of living by 2020 and put an end to ‘poverty pay’.”

Meanwhile, Conservative MPs have said that higher pay for workers is also a good thing for businesses.

In its report, the IFS said: “Increased wages for workers have to be paid for by reduced profits and higher prices. Crucially, there must also be a point beyond which they have a substantial impact on employee numbers.

“Under Conservative plans — and to an even greater extent under Labour — the minimum wage would rise well above levels seen before in the UK, to one of the highest levels in comparable countries. To implement these policies would be to take a risk.”

The IFS also said that Labour’s plan to increase Corporation Tax to 26% to fund higher school spending would increase educational performance but would risk damaging the economy’s long-term growth prospects.

Labour has pledged to scrap Government plans to cut Corporation Tax from 19% to 17%.

IFS associate director Helen Miller said: “Cuts to Corporation Tax have been one of the largest policy changes since 2010. They have bought the UK a more-competitive tax rate and are likely to boost economic activity in the medium to long run.

“We should always remember that all taxes are paid by people, and that workers can feel the effect of Corporation Tax indirectly, though lower wages.”

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