This month’s decrease in hiring and wage increases by British firms suggests that employers are feeling pressured following April’s large increase in the minimum wage.
British businesses reduced their intentions for hiring and wage increases this month, indicating that the significant hike in the minimum wage in April is causing employers to feel pressured, according to a study released on Wednesday.
The difference between companies planning to make cuts and those planning hires, or the staffing plans measure, dropped to 27% from February’s nearly two-year high of 36% in the Lloyds Bank Business Barometer. This is because the Bank of England is keeping an eye out for indications that inflation pressures are lessening enough for it to lower interest rates. The long-term average for the series is 22%.
The percentage of businesses anticipating a 3% or higher pay increase in the upcoming year dropped from 35% to 33%.
Hann-Ju Ho, a senior economist at Lloyds Bank Commercial Banking, stated, “It’s possible the impending minimum wage rises in April are beginning to come into sharper focus for businesses, especially smaller firms.”
Next month, the minimum wage in Britain will climb by almost 10%. Supermarkets and other merchants that only give their employees a small raise have already increased wages in anticipation of the hike.
Despite indications of a downturn, the BoE, which maintained interest rates on hold last week, has stated that wage growth is still high.
According to the Lloyds study, a net 42% of businesses expressed overall confidence.
Separately, the think tank Resolution Foundation stated that because of the minimum wage that was implemented in Britain 25 years ago, low-earners’ income was 6,000 pounds ($7,600) greater than it would have been if it had increased in accordance with average pay growth.
According to Nye Cominetti, the think tank’s main economist, “the introduction of the minimum wage 25 years ago is the single most successful economic policy in a generation.”
Employees with low pay, which is defined as having an hourly rate of less than two-thirds of the median, made up 22% of the workforce in 1999.
Britain currently has one of the highest minimum wages in major economies, comparable to those of South Korea and France, when compared to normal wages. $1 equals 0.7904 pounds.
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