Earlier this month the Government announced an 11% increase in the minimum wage, initially introduced two years ago, to £4.10 per hour. The new rate comes into force in October. Chairman of the Low Pay Commission George Bain said he did not expect this to have an adverse impact on jobs, since ‘it didn’t cause economic disruption last time’.

Service companies such as ISS and Rentokil, who are in favour of the minimum wage, say they are already paying over the required amount and the increase will therefore not affect them. ISS, which is involved in a number of healthcare projects, says it values its security guards, who it believes are a vital asset to hospitals, and therefore pays them £6.40 an hour. It hopes the minimum wage will stop the cost saving mentality and thinks ‘it will greatly improve the calibre of staff.’

Europa Facility Services is “seriously concerned about the cost factor” although it is in favour of improved conditions for employees. The CBI, which accepted the rise, said it would be difficult for small businesses ‘which only have a small capacity to absorb extra costs’. Digby Jones, Director-General, said: “We have argued strongly that raising the wage significantly above £4 an hour would be highly damaging. “

Trade and industry secretary Stephen Byers says up to 1.5 million people will benefit from the increase - including 70% of female workers. He also disagrees with employers' groups who warn that the rise will lead to job losses.

Director-General of the Business Services Association (BSA), Norman Rose, believes the increase could result in BSA members employing one or two people less on a contract however. The BSA does support the minimum wage ‘at a reasonable level’, although the increase was more than it anticipated.

“We shall be able to deal with it. Due to skills shortages we are already paying more,” said Rose. He also welcomed the fact that next years’ figures have already been released, making it easier to plan ahead.

Peter Kingham, director of marketing at the OCS Group, criticised the Government saying it has ‘a duty to enforce the rules’: “At present many companies do not pay the minimum wage or NI, in the knowledge that the chances of getting caught are minimal.”

Kingham also said that public and private sectors must pay the proper rate and not “undermine the minimum wage by following a ‘lowest quote wins’ policy.” Rose agreed, saying: “There is no doubt that lowest cost never is best. You have to look at the total lifecycle cost and look after your staff.”

Peter Kingham of OCS claimed that at initial public sector meetings the discussions focus on quality, “but when it comes down to it, it’s all about price.” “There should be Government guidelines,” he said, although he doesn’t believe the private sector will ever change.
OCS supports the minimum wage, but ‘within reason’, since it’s not only the people at the bottom who will want to get paid more, but supervisors and managers will also expect an increase.

Although the companies above are in favour of the minimum wage, King has identified a weakness: “The same rate applies across the country, and it shouldn’t. In London it should be over the minimum,” he said.

The new rate only covers adult workers and decisions about the youth rate paid to workers aged 18 to 21 will be taken in May, after the General Election. John Monks, general secretary of the Trades Union Congress, welcomed therise and said the TUC would continue to push for the rate to apply to 18 year olds as well.

In Scotland the minimum wage has already increased average weekly earnings by 2.8% last year, compared to 2.3% for Britain as a whole, said Scottish secretary Helen Liddell.

The fact that a number of service providers were reluctant to respond to i-FM’s inquiries highlights the sensitivity of this issue and indicates that not all companies agree with the increased minimum wage, or even follow it…

Jessica Jarlvi