Richard Post: My business week

The chief executive of Reed Recruitment on business reaction to the minimum wage increase
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In a week when the national minimum wage rose from £5.35 an hour to £5.52, and holiday leave entitlement rose to 24 days a year, I've read with interest the responses of various industry groups.

While the TUC is championing the rights of the worker, some business groups have expressed concern for the economy, warning of inflationary pressures. Others are worried about the impact on small businesses.

But every time a minimum wage increase is mentioned, businesses become doomsayers, predicting productivity will suffer and the UK will become ever less competitive. Yet the Government continues to ignore the pleas. Who is right?

Well, the minimum wage is there to protect workers, and isn't designed to penalise businesses. Yes, it may mean some businesses become uneconomic in the short term, and those with substantial wage bills might have to increase prices in order to play catch-up. But that won't be all businesses, and let's not forget an increase in wages will have a positive knock-on effect on consumer spending.

But more importantly, society needs what the Government describes as "decent minimum standards" to function. You only need to look on your doorstep to see the necessity. Take my local restaurants: many are in ideal locations, have nice interiors and serve great food, but are let down by inadequate service. Invariably, it's a case of "you can't get the staff", or that good staff won't work for what restaurants can afford to pay.

And this goes across all sectors. The British Retail Consortium published research last week showing that last year's minimum wage rise cost retailers £1.7bn. But retailers, and all service- based businesses, rely on staff providing a good service. People deserve an honest day's pay for an honest day's work, and there is huge empirical evidence to show return on investment.