The government has urged caution on future increases of the National Minimum Wage (NMW).
In evidence to the Low Pay Commission (LPC), Minister of State for Employment Relations and Consumer Affairs Jo Swinson said minimum wage was starting to have “small adverse” impact on employment opportunities.
“The level of employment is now above its pre-recession peak, but the employment rate is below the pre-recession peak,” said Swinson. “This means that we believe that caution is required – particularly as the minimum wage rate is now at its highest ever level relative to average earnings for adults and remains high for young people.”
Association of Convenience Stores chief executive James Lowman welcomed the government’s evidence. The trade body has also recently submitted evidence to the LPC highlighting the detrimental impact that NMW increases have on retailers.
“The Minister’s evidence to the Low Pay Commission reinforces retailers’ views that a large increase in the national minimum wage would be damaging to the labour market,” said Lowman. “Retailers’ response to minimum wage increase is to cut working hours in the business and delay investment, which is counterproductive to the wider growth agenda.”
According to ACS research, 82% of retailers supported a freeze in the NMW rate and that 80% of those surveyed had laid staff off in the past 12 months due to rising employment costs.
The NMW hourly-rate for adults is currently £6.19, rising by 11p last year. The under-18 rate is £3.68 and the 18-20 rate is £4.98. The hourly-rate for first-year apprentices is £2.65.
The LPC’s recommendations for the National Minimum Wage are expected to be presented to the government at the end of February.