The British Chambers of Commerce has released its annual workforce survey which shows that that the National Living Wage, Apprenticeship Levy and pensions auto-enrolment could lead to reduced opportunities for investment and wage growth due to increased costs for businesses.

The BCC’s annual workforce survey interviewed some 1,400 businesses, citing the apprenticeship levy, pensions auto-enrolment and a new higher minimum wage have increased business costs.

A fifth of businesses complained that the apprenticeship levy was forcing up costs, while eight per cent said the same about the immigration skills charge.

Finally, three quarters of companies report an increase in costs as a result of pensions auto-enrolment.

The Office for Budget Responsibility forecasts an increase in the national living wage to £8.75 by 2020, 38 per cent of businesses said they would put up the prices of their products or services – and 25 per cent said it would reduce pay growth.

The changes to employment legislation were designed to help improve wages and prospects for workers, but the BCC is concerned that high employment costs will have a negative impact on employees

The trade body wants the government to ensure no new upfront costs or taxes are imposed on businesses for the remainder of this Parliament.

Jane Gratton, head of business environment and skills at BCC, said businesses are “under increasing pressure” from the burden of employment costs and she said this would influence the choices they make and outcomes for employees.

“There comes a point at which rising employment costs can no longer be absorbed through reduced profits.

“At a time when employers across the country are facing acute skills shortages, it is vital that they have the resources and flexibility to invest in their workforce and the future needs of the business.

“Employment is just one element of the high upfront cost of doing business in the UK. It is the cumulative impact of all of these changes, and the pace at which they are being introduced, that causes the greatest concern and poses the biggest risk.

“There is little scope for firms to absorb any further costs without there being damaging effects on competitiveness, growth and opportunities for people in the workforce. The government must ensure that there are no upfront further costs or taxes on businesses and entrepreneurs for the remainder of this parliament.”

The government has announced the minimum automatic enrolment contributions will increase to 5 per cent in 2018 and 8 per cent in 2019.

Auto-enrolment was launched in October 2012 and by 2018, when the roll-out is complete, it is expected up to 11m people will be newly saving or saving more as a result.

Of the businesses surveyed, 94 per cent were SMEs, 29 per cent operate in the manufacturing sector, and 71 per cent operate in the services sector.