More inflation-busting hikes in the national minimum wage could cost retailers £2.7bn and 20,000 jobs, the British Retail Consortium warned this week.
Almost half (44%) of 1,200 retailers surveyed by the BRC said they would be forced to make job cuts if the Low Pay Commission upped the national minimum wage to £5.20 an hour - an increase of more than 7%.
The BRC says October’s rise from £4.50 an hour to £4.85 for over 21s, from £3.80 to £4.10 for 18-21s and a new £3.00 minimum for school leavers, has already cost the industry £1.7bn.
Further increases will also mean reduced benefits packages and the end of geographical and hierarchical wage differentials within companies to absorb costs, said Kevin Hawkins, director-general. “There is clearly no justification for further increases to the NMW in real terms.
“The survey has confirmed retailers’ fears, that an ill-thought-out decision on this will hit every retailer hard. The retail industry employs 2.8 million - 11% of the total UK workforce - but many retailers will have no choice but to make job cuts.”
Scott Landsburgh, director-general of the Scottish Grocers Federation, said independent retailers would be hit the hardest if the rate went up. He said: “My gut reaction is that this is the tipping point. In c-stores, people’s safety could
actually be compromised because some retailers will have to reduce the staff count at night time to just one person. Obviously, the only way to counter this if you can’t cut any more jobs or reduce costs elsewhere in the business is to put your prices up and increase margins - but that won’t do you many favours in the long run.”
Given that inflation was running at less than 3%, a 7% rise in the national minimum wage was hard to justify, said Francis Chaney, finance director at Spar retailer Lawrence Hunt & Co. He said: “For us, this would put another £130,000 on to our wage bill, meaning we would have to boost sales by 1.5% just to cover the increase. Lots of c-store retailers are not seeing that kind of sales growth, so it’s very worrying.
“The other concern is that it will simply fuel the black economy with more workers at independent retailers being paid cash in hand.”
Almost half (44%) of 1,200 retailers surveyed by the BRC said they would be forced to make job cuts if the Low Pay Commission upped the national minimum wage to £5.20 an hour - an increase of more than 7%.
The BRC says October’s rise from £4.50 an hour to £4.85 for over 21s, from £3.80 to £4.10 for 18-21s and a new £3.00 minimum for school leavers, has already cost the industry £1.7bn.
Further increases will also mean reduced benefits packages and the end of geographical and hierarchical wage differentials within companies to absorb costs, said Kevin Hawkins, director-general. “There is clearly no justification for further increases to the NMW in real terms.
“The survey has confirmed retailers’ fears, that an ill-thought-out decision on this will hit every retailer hard. The retail industry employs 2.8 million - 11% of the total UK workforce - but many retailers will have no choice but to make job cuts.”
Scott Landsburgh, director-general of the Scottish Grocers Federation, said independent retailers would be hit the hardest if the rate went up. He said: “My gut reaction is that this is the tipping point. In c-stores, people’s safety could
actually be compromised because some retailers will have to reduce the staff count at night time to just one person. Obviously, the only way to counter this if you can’t cut any more jobs or reduce costs elsewhere in the business is to put your prices up and increase margins - but that won’t do you many favours in the long run.”
Given that inflation was running at less than 3%, a 7% rise in the national minimum wage was hard to justify, said Francis Chaney, finance director at Spar retailer Lawrence Hunt & Co. He said: “For us, this would put another £130,000 on to our wage bill, meaning we would have to boost sales by 1.5% just to cover the increase. Lots of c-store retailers are not seeing that kind of sales growth, so it’s very worrying.
“The other concern is that it will simply fuel the black economy with more workers at independent retailers being paid cash in hand.”
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