Retailers may be faced with further minimum wage costs next year as the government calls for above-inflation increases.
In its 2015 remit to the Low Pay Commission (LPC), the government has asked for an investigation into the “wider economic impacts of faster rises which would restore the real value of the minimum wage” and wants the LPC to assess if above-average minimum wage increases could be introduced without harming employment.
Business secretary Vince Cable said: “As the economy continues to strengthen, I want more workers to share the benefits of the recovery. This is why I am asking the LPC to once again look at whether the economy is strong enough to support above inflation rises, helping those on low pay get a fairer deal.”
The National Minimum Wage is set to increase in October 2014
- 19p (3%) increase in the adult rate (from £6.31 to £6.50 per hour)
- 10p (2%) increase in the rate for 18-20 year olds (from £5.03 to £5.13 per hour)
- 7p (2%) increase in the rate for 16-17 year olds (from £3.72 to £3.79 per hour)
- 5p (2% increase in the rate for apprentices (from £2.68 to £2.73 per hour).
The government also called on the LPC to look into simplifying the minimum wage rate for apprentices.
Association of Convenience Stores (ACS) chief executive James Lowman expressed concern over the direction of the remit.
“We are disappointed that yet again the business secretary has set out a remit for the Low Pay Commission that is based on a leading presumption that rates should increase,” he said. “Politicians from all sides are having their say on what the minimum wage should be and we fear this could undermine the independent and robust process that the Commission has developed over a number of years.”
He added that the ACS would be conducting research into the impact of yet another rise in the National Minimum Wage. “We will be conducting a detailed survey of our members and will provide a clear picture of the impact of current and future rises in the minimum wage on local shops,” said Lowman. “We know from previous years that when the minimum wage increases, retailers are forced to cut staff hours and make other cost reductions in their business.”
The LPC is due to report back with its recommendations in February 2015.