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CBI Chief: Government short-termism risks jobs and growth

For job seekers, increases in the minimum wage effectively remove rungs from the bottom of the ladder limiting entry-level opportunities

Carolyn Fairbairn, Director-General of the Confederation of British Industry, has accused the Government of threatening future prosperity by playing short-term politics.

Despite recent economic growth and job creation in the UK, she is concerned that a “cumulative burden” on businesses will undermine that growth and lead to job losses in the future.

In a message looking forward into the new year, Ms Fairbairn highlighted key issues that will impact business in 2016.

Ms. Fairbairn commented:

“The Government has placed a number of extra strains on UK businesses that are adding up: the national living wage, the apprenticeship levy, pension auto-enrolment . . . businesses want to reward their staff fairly but, as the burdens and costs accumulate, particularly in the retail sector, growth risks being cut off and jobs lost.”

The national living wage for adults is set to increase to £7.20 an hour from April. Such increases are routinely absorbed by larger firms and corporations, but hit small to medium enterprises hard. For job seekers, increases in the minimum wage effectively remove rungs from the bottom of the ladder limiting entry-level opportunities.

The planned apprenticeship levy is a five per cent tax on company payrolls to be applied from April 2017 on businesses with a wage bill of over £3 million. The Government hopes that this measure will add £3 billion to its coffers for the purpose of sponsoring apprenticeships. When first announced, Ms Fairbairn described the tax as the sting in the tail of the Chancellor’s budget.

In her recent statement, she further criticised the apprenticeship levy as lacking any clear delivery system and risking failure in “chasing blunt targets”. With skills being a top priority, this and the UK’s “wrong-headed” visa policies are worsening the skills shortage, according to Ms Fairbairn.

Regarding the UK’s future in Europe, Ms Fairbairn appeared cautious. Looking forward to the expected 2016 referendum on continued membership in the EU, she encouraged informed public debate from both sides.

As for the CBI itself, the focus in 2016 is on providing information for its membership of over 250,000 public and private sector entities.

Ms. Fairbairn added:

“We will provide clear evidence, share case studies from businesses of all sizes and sectors, host debate and discussion, evaluate reforms as they are achieved and faithfully report the views of our members.”

As politicians continue to pander to public opinion with short-term gains, the Director-General’s comments highlight the struggle for businesses seeking to invest when rules “repeatedly change”.

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