Tax Breaks for Living Wage Businesses

Labour Party leader Ed Miliband has said that he will offer tax breaks to businesses that provide their staff with the living wage.

After offering to freeze energy bills for the general public, the Labour Party has now dangled a carrot for the business community.

If Labour wins the next election, leader Ed Miliband has promised to offer tax incentives for firms that offer their staff the living wage.

Where the National Minimum Wage is the absolute legal minimum that employees can be paid, the Living Wage is considered to be the minimum wage that people can reasonably expect to cover their basic cost of living.

The National Minimum Wage currently stands at £6.31 an hour. The Living Wage is £7.45 outside London and is £8.55 in the capital and it is expected that Boris Johnson, the Mayor of London, will announce a new rate next week.

Ed Miliband has said he will offer firms a twelve month tax break worth as much as £1,000 per worker if they sign up and offer their staff the Living Wage as part of his plan to "make work pay".

The reaction to the Labour Party leader’s proposal was a cautious welcome from the CBI’s John Cridland however, the concern remains whether businesses will be able to afford to pay their staff more wages.

One issue pointed out by the CBI leader was that if independent high street retailers, who are already under financial and commercial pressure, were to afford to pay a living wage to their staff they might need to raise their prices to raise the funds to do so.

Mr Miliband’s thought process behind the proposal is the fear that there is currently growth but no prosperity. With costs rising faster than wages his concern is for wage stagnation.

The Labour leader also mentioned the growing inequality between wages and wage increases for those "at the top" and ordinary working families.

Ed Miliband will make his speech at the CBI annual conference at the Hilton London Metropole on Monday 4th November.

Employers with an interest in paying the living wage to their workforce should take a look at The Living Wage Foundation website.

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