The Low Pay Commission is to investigate the impact of the national minimum wage on small businesses and the employment of younger workers.

This week, the Low Pay Commission announced the minimum wage would increase by 2%, or by 13p an hour, to £5.93 in October for workers over 21. The pay of workers aged 18 to 20 will increase by 9p to £4.92 an hour, while 16 and 17-year-olds will get £3.64 an hour.

"Workers on the national minimum wage are disproportionately likely to be employed by small firms and so it is right the Low Pay Commission considers their competitiveness when they make their recommendations for next year," said employment relations minister Edward Davey. "SMEs will be vital to our economic recovery".

The ACS said it welcomed the new focus. "It is a good step forward for the government to acknowledge the impact of the wage on small firms in particular," said CEO James Lowman. "While local shops support the minimum wage, and strive to pay above this rate, it has become increasingly difficult to maintain staffing levels with the year-on-year above-inflation increases.

"We had asked the government to review this October's minimum wage increases, which come at an extremely difficult time for retailers. It is disappointing that this additional cost will hit retailers and inevitably undermine employment in our sector."

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