PAYING more staff ‘the living wage’ could result in a reduction in employee benefits and even fewer jobs, one business leader has warned.

Clair Prosser, policy executive at Oxfordshire Chamber of Commerce, said: “There is no doubt that low pay is a problem in Britain, with five million employees earning below a living wage.

“Yet political and campaign pressure to increase wage rates at the bottom end could result in ballooning pay bills right up the scale, leading to reductions in employee benefits, loss of jobs, or reduced investment.”

Ms Prosser’s comments come as Oxfordshire County Council has agreed to pay its employees more than the standard minimum wage to take into account the higher cost of living in the county.

It will become one of an increasing number of councils in Oxfordshire to pay its workers a ‘living wage’, with average rates at £7.65 an hour.

Miss Prosser said: “Higher pay with no consequent improvement in skill levels or productivity could hurt our competitiveness across the world. Domestic debates like this take on an increased significance.”

But council leader Ian Hudspeth said it was in recognition of council staff’s work.

He said: “It is to make sure they are getting good recompense for all the hard work they do.

“We are working to have full implementation by April 2017, but I would like to think that if negotiations go well we could implement it by April this year.”

At around £7.65 an hour, the living wage is higher than the national minimum wage, currently £6.31, and is calculated based on the cost of living in a specific area of the UK.

At the moment, the Labour-run Oxford City Council is the only local authority in Oxfordshire which has been given a living wage accreditation by paying its employees more than £8 an hour.

However Cherwell District Council and West Oxfordshire District Council also pay the living wage.

  • The figure for the UK living wage is set annually by the Centre for Research in Social Policy at Loughborough University. It looks at what households need in order to have a minimum acceptable standard of living.