The prime minister’s recent call for increased wages has met with a cool response from business groups, which argue that the priority should instead be improving productivity.
Mr Cameron invited business leaders at last week’s British Chambers of Commerce annual conference to pass on the benefits of the economic recovery to their workforces in the form of pay rises.
He said: “Now that your costs are falling and it’s cheaper to do business – I’m confident that more businesses will pass on that good economic news to their workers, in rising pay cheques and higher earnings.”
Katja Hall, the deputy director of the CBI, said that wages were expected to pick up as the recovery continues; however, she added that this would need to go “hand-in-hand with rising productivity”. She continued: “Basing wage increases on temporary market movements seems to be at odds with the long-term economic plan.”
Ms Hall’s sentiments were endorsed by Ben Willmott, head of public policy at the CIPD, who acknowledged that business costs were falling but pointed out that productivity growth was still stalling in the UK.
He added: “Simply asking businesses to improve pay, without examining more closely the factors that have contributed to our poor productivity performance, fails to address the underlying cause of low wage growth.”
Employers, Mr Willmott observed, were actually spending less on training their workforces than before the recession.
One point the business groups omitted to note was an exemplary model of high-value workers: Umbrella Company Employees and others in the professional contracting community. These workers have earned themselves a well-deserved reputation amongst employers for being highly skilled and highly productive.