Lincolnshire firms must decide if they can afford to pay workers the Living Wage, said Simon Beardsley, Chief Executive of the Lincolnshire Chamber of Commerce.
The Living Wage outside London will go up by 25p to £7.45, compared with the minimum wage of £6.19.
That is an increase of £9.50 for a typical 38-hour week, or £494 a year.
While the number of people across the country on Living Wage trebled, only 45,000 people in the UK have seen the increase from minimum to living wage.
“I have no problem with the principle of the Living Wage but it has to be decided by the company according to what it can afford,” explained Simon Beardsley, Chief Executive of the Lincolnshire Chamber of Commerce.
“The last thing that Lincolnshire businesses need at this time is wage inflation, which could harm their recovery from the recession.
“Whilst county business owners will want to reward their workforce appropriately, increasing operating overheads by adopting the Living Wage will be difficult to justify for many in the current economy climate and due to the predominance of smaller business in the county.
“There are suggestions that larger businesses should implement the Living Wage as part of their corporate social responsibly, but to impose it on every business regardless of its size could have a negative impact on its ability to compete or trade in a global market, especially when compared to overseas firms which do not follow the Living Wage model.
“If it becomes the difference between a company making a profit or a loss then it is a real problem,” he added.
For smaller county businesses, it might be even more difficult to implement the Living Wage, said Michael Self from the Lincolnshire branch of the Federation of Small Businesses.
“Small firms want to pay their employees more, and recognise the benefits of doing so. However, they are struggling to manage cash-flow in the midst of weak economic demand and increasing energy and fuel costs.”
“Businesses can only pay the wages which allow them to sell their products and services at realistic prices,” he added.