LONDON, Sept 15 (Reuters) - British businesses in thehospitality, retail and social care sectors are likely to bechallenged by a planned rise in the minimum wage and will needto find ways to boost productivity, an economic think tank saidon Tuesday.
The Resolution Foundation, which researches low pay, saidfinance minister George Osborne's plan to raise the hourlyminimum wage to 9 pounds by 2020 from its current 6.50 poundscould lead to lower hiring and profits and higher prices.
"Past warnings about the negative effects of the minimumwage on employment have been wide of the mark, but the size ofthe increase in the new wage floor will certainly be challengingin sectors such as hospitality, retail and care," Conor D'Arcy,a researcher at the Resolution Foundation, said.
Businesses such as Whitbread, which operates hotelsand coffee shops, and clothing retailer Next say thebigger-than-normal increases may cost jobs.
Osborne is seeking to boost work incentives and cut the costof welfare for the low-paid.
Britain's independent budget forecasters estimate the newminimum wage will result in 60,000 fewer jobs and project thecost to business would amount to 1 percent of corporate profits.
The higher minimum wage will directly affect around aquarter of British workers, the Resolution Foundation said, andraise employers' wage bill by 0.6 percent by 2020, plus higheremployer social security and pension contributions.
In the hospitality sector, which relies on low-paid staff,the pay bill will rise by 3.4 percent and the government willneed to find an extra 1.3 billion pounds to pay for social care,the report said.
"While some (employers) may opt to reduce hours or newhires, past experience tells us that most absorb the pressuresvia some combination of small increases in prices, a dip inprofits and productivity gains," D'Arcy said. (Reporting by David Milliken; editing by William Schomberg)