The minimum wage was meant to help workers. It's hurting them

Telegraph

15-04-2025

Spring is usually a busy period at the Ben Reid Garden Centre on the outskirts of Aberdeen. But this year it has come with a chill for the 250-year-old family business.
'Passion, plants and people – it is the three Ps that make our business,' says boss Simon Fraser. 'We're really struggling with one element of the 'people' bit: with the cost of it.'
Fraser is referring to the rise in the National Living Wage, the minimum legal wage for those aged 21 and over, which leapt by 6.7pc to £12.21 per hour on April 1 – just as companies were hit by a £25bn tax raid through higher employer National Insurance (NI) contributions.
The UK now has one of the highest minimum wages in the world. It is a challenge for business owners such as Fraser, whose other bills are rising too.
Reluctantly, he's had to put several of his staff on short-term contracts, cut hours from five days a week to four during the quieter winter months and laid off the shop's delivery driver.
'We're stopping developing our business because it's getting too expensive to pay people to do that,' he says. Cost burdens have become so high that 'we feel like with the payroll of six people, we're employing a seventh who doesn't exist', he adds.
It's a struggle that will be familiar to many business-owners across Britain who are running just to stand still in the face of surging cost pressures.
The minimum wage has long been lauded as the UK's most successful intervention for low-paid workers since its introduction in 1999, persistently proving critics who warned of job losses wrong.
But the twin blows of surging employment taxes and rising wages in a fragile economy have prompted experts to warn that job losses may finally come to pass this year. Even Trades Union Congress boss Paul Novak recently conceded that there was a risk of underemployment.