Raising the minimum wage could have a worrying knock-on effect on recruitment, a leading industry spokesman has warned.

Rob Dunbar, operations director of Kelly Services, is concerned about possible government plans to increase the wage to £5.20 an hour.

He said: “We are supportive of the move to improve standards for our flexible workers and we have no evidence to suggest that the increase to £4.85 has had a detrimental effect on our business. However, if the minimum wage was to increase further to £5.20, it could mean that customers paying staff at these levels might find it more difficult to justify using an agency.”

The British Retail Consortium (BRC) published a report last month which predicted a further rise in the minimum wage would cost at least 20,000 jobs.

Dunbar added that if employers found themselves with higher costs they would be keen to look at ways of recouping these costs, which could drive recruitment agency margins down.