One in four firms have cut recruitment following the introduction of the national living wage (NLW), a study has shown.
Of the 1,600 business leaders questioned, a third planned to scale back hiring staff if the £7.20 an hour rate for adults increases to £9 by 2020.
The survey showed others were looking to change staff hours, benefits or pay growth.
The British Chamber of Commerce (BCC) has said its research suggests a rising cost burden on many companies.
Head of education and skills at the BCC, Marcus Mason, said: "A significant number of firms have already had to re-balance their books to meet the cost, which can have a knock-on effect on recruitment or growth plans.
"Many firms would have to change their business models, by increasing prices and reducing staff, if the NLW increases to £9 per hour by 2020.
"The Government needs to take an evidence-based approach to setting the NLW.
"Further increases need to be proportionate, reflecting business uncertainty, slowing growth and high input costs, to avoid having a negative effect on employment", he added.