The minimum wage will increase by 3% from October, the government has announced.
In a speech this morning, business secretary Vince Cable confirmed the government had taken on all of the wage rise recommendation set out by the Low Pay Commission. The adult minimum wage will increase from £6.31 to £6.50, a 19p increase.
The government has also accepted the commission’s recommendations on a 2% wage rise for 16-17 year olds and a 2% rise for apprentices. From October, these hourly rates will increase to £3.79 and £2.73 per hour respectively.
But the Association of Convenience Stores, which has long campaigned against a proposed rise, said it was “disappointed” with the news, though it added it was pleased the government had not “buckled under political pressure” to introduce any rise higher than that set out under the recommendations.
“We are disappointed with the increase in the National Minimum Wage above inflation, above average earnings growth, and above public sector pay award levels,” said CEO James Lowman. “Our research has clearly shown that retailers have little choice but to reduce staff hours and delay further business investment when the minimum wage is increased.”
The 2013 ACS Minimum Wage Survey showed that 87% of retailers have reduced staff hours within their business as a result of increases in employment costs, while 75% have delayed expansion and investment plans.
The majority of independent retailers believe they earn less than the national minimum wage when working hours are taken into account, the ACS added.
The National Federation of Retail Newsagents also reacted to the news as a “real blow to independent news and convenience store owners”. It said it would push the government to make ‘micro businesses’ exempt.
“We have repeatedly warned that times are so tough for the NFRN’s 16,000 members and the hours that they work are so long, that many do not pay themselves anywhere near the national minimum wage rates,” said CEO Paul Baxter.
“Now these new rates have been confirmed, we are likely to see job cuts, reductions in staff hours or even members digging even more deeply into their own pockets or savings to pay their staff.
“Going forward, there needs to be greater consideration of the impact that annual increases to the NMW have on the independent business sector,” he added.
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