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Recommendation on new minimum wage delayed

The government has accepted a request from the Low Pay Commission to delay an announcement of its recommendations on this year’s rise in the national minimum wage.

The Commission was due to publish its recommendations at the end of February but has asked for further time to consider more information on the state of the economy. It will not now report until the beginning of May.

Specifically, the Commission wants the delay so that it can examine the Bank of England’s next Inflation Report, employee jobs figures for December 2008, GDP figures for the fourth quarter of 2008 and updates on average earnings.

Professor Sir George Bain, the chairman of the Commission, said: “The Low Pay Commission has always based its recommendations on research, evidence and analysis of economic data. This year, the National Minimum Wage faces up to its first recession. By delaying its report until 1 May, the Commission will have access to two month’s additional data.”

However, Sir George added that the delay will not have an impact on the planned date for implementing the new rates which is set for 1 October 2009.

The news has given business groups hope that the Commission may be looking at the possibility of freezing the minimum wage rate in order to safeguard jobs.

Last month, the British Chambers of Commerce (BCC) urged the Commission to recommend holding the minimum wage at its current levels throughout 2009 and until economic conditions have significantly improved.

The BCC calculated that a further increase in the minimum wage at the same rate at which it rose in 2008 would cost businesses £300 million.

Hard-pressed businesses, the BCC argued, will be unable to afford a wage increase anywhere near that sum and that any rise above zero per cent risks adding to unemployment.

David Frost, the BCC’s director general, said: “We’re not opposed to the minimum wage going up when employment is high and the economy is doing well, but when jobs are being lost daily and a recession is in full swing, it makes no sense to increase the NMW.

“Most businesses are prioritising survival at the moment. A rise in minimum wage would not help firms hold onto staff and would simply add to unemployment. We continue to urge the Low Pay Commission to recommend a freeze.”