The six month exemption is intended to encourage small businesses to take on staff. The GLA Conservatives believe it could be what's needed to give small businesses the boost to grow. Tony Arbour said:
“A time of high unemployment is not the right time to be pricing out those at the margins of the labour market. I think it is important to now consider the idea of a minimum wage holiday for micro businesses and start up companies who employ fewer than 10 members of staff. This will encourage these small enterprises to take on new workers.
“The minimum wage can act as an inhibitor for small and micro businesses and prevent them from taking the necessary risks to succeed.”
Although the national minimum wage will increase by 1.8% later this year to £6.31 for adults, we've previously looked at the impact of low incomes on London's housing and found that while (to borrow a Facebook phrase) It's Complicated, the situation could certainly be eased by applying the London Living Wage (LLW) of £8.55 an hour.
It's currently nigh on impossible for those on low incomes to live in the capital without being subsidised by benefits so we're slightly surprised to see that allowing employers to pay less then the minimum wage — even for a short time — is being touted as a way of boosting the economy. Especially at the same time as benefit caps are being applied and workers are suffering wage cuts. It also very much flies in the face of the Living Wage Campaign, which is supported by London mayor Boris Johnson.
While we're not insensible to the longer-term benefits of helping small businesses with their finances, we're not sure that employees should be the ones taking the hit to achieve that.
Photo by Laura McGregor in the Londonist Flickr pool.