Inflation-busting increases to the national minimum wage are disastrous for small shopkeepers struggling with soaring costs

In how many industries does the boss often earn a lot less than their most junior staff member? Welcome to the Alice-in-Wonderland world of small shops, as the national minimum wage goes up by more than inflation yet again. In how many government departments does the office junior get far more holiday entitlement than the top mandarin? Yet while statutory holiday entitlement goes up by four days for their staff, many shopkeepers hardly ever have a weekend off, let alone a proper holiday.

We have reached the point where a large number of people are worried about the widening pay gap between the bosses and the workers - and it is the shopkeepers who are coming off a decided second-best.

I have recently spent a lot of time in village shops. While trying to help subpostmasters to keep their shops open after the post office income is taken away (clue: it takes a lot more than a bit of prudence, Mr Brown), I have seen many of their financial accounts. These often show wages making up half or more of their total overheads. With ever-rising electricity bills (all that refrigeration!), supermarkets selling at prices below the levels that small shops can buy at (thanks, Competition Commission, we're glad it is nothing to do with abuse of market power) and then an inflation-busting pay increase for staff, many independent shops will be running out of options.

Small shopkeepers are nice people. They want to be able to pay their staff well. Often their employees are also their neighbours: parents of young children getting back to work, young people back from college with a degree in media studies waiting for their big break, older people who have been made redundant from bigger jobs but who still want to work and contribute. Of course these people would like to be paid as much as possible. But a job a few minutes' walk away, with no expensive commute, offering some flexibility, and actually quite interesting, is better than earning a few pence per hour more in the town centre - and certainly far better than no job at all.

As a result of the minimum wage rising faster than inflation for several years, there will be fewer employed hours in the small retail sector. Some proprietors will work even longer or take less holiday. There will be shops that will put their prices up and become less competitive. For some, investment in the business will be reduced - the old noisy chiller will have to last another year (fingers crossed).

More proprietors will envy their staff as they make up their wage packets or as they wish them well as they go on holiday.

In some cases, the rising wage bill will be the straw that breaks the camel's back and communities will lose out as their local shop closes.

In the grand scheme of things, this doesn't matter. After all, we are only talking about a few thousand micro businesses, most a long way from London. A few dozen extra closing is easily lost in the statistics. The lives of only a few hundred customers are diminished. An old lady who, without her local shop, cannot cope and finally has to move into a residential home. A single parent who has to catch two buses to get to town. A green campaigner who has to concede defeat and buy a car.

Clearly we are all in favour of paying staff a fair wage. But I am also in favour of leaving a fair return to small shop owners as well... perhaps even enough for just the occasional day off?n

Kenneth Parsons, chief executive, Rural Shops Alliance

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