The government will also need to take into account the additional costs that many of these employers will face in 2012 when they have to make contributions into the new personal accounts pension scheme for employees who decide to join this scheme.
However, EEF is disappointed that the Government has again missed the opportunity to provide manufacturers with greater certainty about the impact of the NMW on their businesses by failing to base increases on a pre-determined formula.
In its evidence to the Low Pay Commission, EEF has consistently argued that future increases in the NMW should be determined by a formula based on movements in basic rates of pay across the economy. This would then enable manufacturers to plan for the resultant impact that these increases will inevitably have on their costs and remuneration structures through the need to maintain pay differentials.
Commenting on today's announcement, David Yeandle, EEF Deputy Director of Employment Policy, said:
"We are pleased that the Government has recognised the additional costs that many employers paying the NMW will face when statutory annual holiday entitlement increases in October 2007. Whilst manufacturers will welcome this modest increase in the NMW, they continue to believe that future increases should be based on a pre-determined formula.
“They are disappointed that, yet again, the Government has missed the opportunity to provide them with greater certainty about the future impact of the NMW on their businesses which would enable them to plan accordingly."
ENDS
Editors' Notes
EEF, the manufacturers’ organisation, is the representative voice of manufacturing in the UK with a federation of 11 regional Associations, ECIA (the Engineering Construction Industry Association) and UK Steel division. EEF has a growing membership of 6,000 companies of all sizes, employing some 900,000 people from every sector of engineering, manufacturing, engineering construction and technology-based industries.
In its latest evidence to the Low Pay Commission, EEF argued that a formula based on movements in basic rates of pay across the economy should be used to determine future increases in the NMW. However, EEF also argued that this would sometimes need to be modified to reflect special circumstances such as forthcoming legislative changes that are likely to have a disproportionate impact on those sectors of the economy and employers who are paying the NMW.