Minimum wage: ‘an indirect impact’ on food manufacturers

The National Minimum Wage (NMW) has increased by 20p to £6.70 an hour for adults and the rate for apprentices increased by 57p to £3.30 an hour.

The 3% minimum wage rise would not have a “direct impact”​ on food and drink manufacturers because employees' pay was dependent on the market, the Food and Drink Federation (FDF) said.

‘Indirect impact on companies’​

“However, this increase will have an indirect impact on companies by creating pay pressures in the system for pay settlements above inflation,”​ the FDF told the Low Pay Commission (LPC).

“There is also likely to be an impact around the cost of services, such as cleaning, catering and security.”​

A FDF spokeswoman said the LPC should take a “cautious approach”​ when recommending minimum wage increases to the government given the difficult economic climate. 

She said: “FDF considers that it is critically important for the future competitiveness of the UK food and drink manufacturing sector that the direct impact of the NMW on its members is minimised,​ though following feedback from companies it is clear that the majority of members do pay above the NMW.”​​

The National Living Wage, set at £7.20 an hour, will be introduced from April 2016 even though credit rating agency Moody’s warned​ that it would lead to food price increases and job losses.

‘Well-deserved’ pay rise​

Business secretary Sajid Javid said more than 1.4M of the country’s lowest-paid workers got a “well-deserved”​ pay rise yesterday (October 1).

“The increase for apprentices is the largest in history making sure that apprenticeships remain an attractive option for young people,”​ Javid said.

“The National Minimum Wage will see the largest real-terms increase since 2007.”​

Meanwhile, Lidl and Morrisons have recently announced plans to increase basic pay​ for store staff to £8.20 an hour.