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Half of employers increase staff wages

Almost half (49 per cent) of small businesses with employees on the national minimum wage (NMW) have increased wages in the last 12 months or are considering raising pay in the future, research from the Federation of Small Businesses (FSB) has found.

Other findings from the FSB include:

  • The number of businesses with staff on the NMW has fallen in the past year, from 27 per cent to less than a quarter (23 per cent)
  • Almost half of businesses pay their staff at or above the Living Wage - the hourly rate required to meet the basic cost of living in the UK
  • Most small businesses are hoping to increase wages where they can afford to do so

However, its research also found that many small businesses are not in a position to absorb the cost of pay rises, particularly in low paid sectors such as retail or hospitality where the pace of recovery has been slower.

The research follows the FSB's recent discovery that 15 per cent of small businesses increased their staff numbers in the third quarter of 2013 - the highest percentage since its Small Business Index began in 2010.

National chairman for the FSB, John Allan, welcomed the findings as proof of growing business confidence as the economy continues to show signs of recovery.

"Small businesses are competing for good quality staff in the labour market and pay and benefits are a big part of this," he said.

"However, even with the beginnings of an economic recovery, small businesses in some sectors still face rising business rates and utility bills. This means that not all firms are in a position to raise salaries and policymakers therefore need to be prudent when legislating on pay."

"Any future Government will want to explore other ways to enable firms to pay more. This should start by coming up with a long-term enterprise policy to help create the optimal environment to do business and boost economic growth. Our education and skills system has to be better linked to the needs of the business community. This in turn will help small firms create jobs and further boost salaries."