The Institute of Directors has welcomed new penalties for employers who fail to pay their staff the minimum wage, announced by David Cameron today, but highlighted that the number of businesses who purposefully break the rules is small.
Simon Walker, Director General at the Institute of Directors, said:
“The business community is as outraged as the prime minister at employers who skirt the law and undercut wages. Those that do so should be punished and face prosecution. David Cameron is right to focus on enforcement, and businesses will join him in condemning bad behaviour.
“Tough talk about ‘unscrupulous employers’, however, runs the risk of portraying this as a widespread problem and betrays the fact that this is beyond rare. Since 2013, only 285 employers have been found guilty of not paying staff the national minimum wage. This is of a total of 1.27 million employers in Britain – meaning just 0.02 per cent broke the rules.
“The IoD continues to support the introduction of the new living wage. Nine in ten IoD members already pay more than the living wage to even their most junior members of staff. The surprise cut to corporation tax and increase in the employment allowance, announced in the Budget, will help businesses pass on savings to staff in the form of pay rises – a deal which IoD members are happy to accept. Ultimately, however, it is important to remember that the only determinant of long-term wage growth is improved corporate performance, driven by productivity gains, so we welcome the government’s continued focus in this area.”