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Small businesses ‘need help’ with minimum wage increase, FSB claims


The Federation of Small Businesses (FSB) has called on the Government to provide more support to small businesses to help them cope with the latest increase in the National Minimum Wage (NMW) rates, which came into effect on 1 October.


The business group has called for the Government to consider extending the Employment Allowance to help small businesses under pressure from rising wage costs.


The FSB’s recent quarterly Small Business Index report showed that confidence amongst small firms is in negative territory for the first time in four years, while labour costs were the largest cited rising cost for small businesses, with 42% reporting it as a concern.


Mike Cherry, National Chairman of the FSB, said: ‘Small businesses are reacting to difficult economic conditions with characteristic resilience, but they will need more help if increases to the minimum wage are to be a success and not affect employment levels or investment decisions.

‘We call on ministers to consider a significant uprating of the Employment Allowance from its current £3,000 level. This has already helped to boost pay levels and incentivise job creation, and could be the lifeline many smaller firms need due to fast-rising labour costs.’


As from 1 October, the NMW increased from £6.70 to £6.95 an hour for 21 to 24-year-olds, and from £5.30 to £5.55 for 18 to 20-year-olds. For 16 to 17-year-olds, the NMW rose from £3.87 to £4.00 an hour, and the NMW rate for apprentices increased from £3.30 to £3.40 per hour.


For those aged 25 and over, the National Living Wage (NLW) of £7.20 now applies.