NEW YORK SHARES

17 June 2012 Last updated at 03:24 ET

Business leaders have warned the Welsh government not to push for private sector pay rises as ministers investigate public sector wage levels.

Labour has a manifesto commitment to find ways of making sure all Welsh workers are paid a "living wage".

Supporters say that is enough for basic living costs and to raise a family, or £7.20 an hour by some estimates.

But business groups say it could stop them taking on more staff or even result in layoffs.

Academics at Loughborough University have estimated a living wage is at least £7.20 an hour.

The current statutory minimum wage is £6.08 an hour for workers aged 21 and over.

Ministers are looking at how to encourage devolved public sector employers to pay a living wage. A policy group of interested parties is expected to meet over the summer.

Welsh NHS workers and Welsh government civil servants are already paid at least the living wage.

A number of big private sector employers, including Barclays Bank and accountants KPMG, are also signed up to paying it.

But business organisations warned Welsh ministers not to try to force them to raise wages, for example by inserting living wage clauses in government contracts.

'Problems'

Robert Lloyd Griffiths of the Institute of Directors said he was concerned the living wage would effectively become the new minimum wage.

"Businesses would like to take on more staff and lots of companies that I talk to would love to be in a position to be able to take on more employees," he said.

"It's very difficult out there and anything that now will hinder them from doing that, which they'd like to do, is going to cause problems.

"I'm afraid it just isn't realistic in the environment we live in."

Anna Milewski, of the Federation of Small Businesses, said: "We have to look at it from the employers' perspective, we've surveyed them.

"They say that an increase can, at best, deter them from taking on staff at worst actually result in them laying off staff, which would not be a positive outcome, of course."

Labour AM Julie Morgan said: "If we're the trailblazers we hope the private sector won't be so frightened of it and will actually see the benefit of a workforce which when they're happy and healthy work harder, stay longer, are more and actually do better work.

"So it's a win win, really."

Young campaigners, working with Save the Children, recently petitioned the assembly for a living wage above the minimum wage.

Iram Shahzad, a 13-year-old pupil at Fitzalan High School in Cardiff, told BBC Wales Sunday Politics that people in her community were working long hours but not earning enough money to cover their everyday essentials.

"It's not fair that they don't get to live a happy life," she said.

James Pritchard, head of Save the Children in Wales, said a living wage would be a "direct way of starting to tackle child poverty".

He said: "We know that if we start to pursue living wage policies across the board in Wales, across the public sector and the private sector, then we are putting money into the pockets of the parents of children who are struggling with the current economic situation."

Sunday Politics is on BBC One Wales at 12:00 BST on 17 June.