National Living Wage hits smaller businesses harder, LPC admits

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The National Living Wage (NLW) may have had a disproportionate effect on convenience stores and other micro and small businesses, the Low Pay Commission (LPC) has admitted.

The report, A rising floor: the latest evidence on the National Living Wage and youth rates of the minimum wage, shows 18% of workers in micro firms and 12% in small firms, as represented by most convenience store businesses, are more likely to be paid the minimum wage than those in large firms (nearly 7%) and very large (6%).

Its analysis comes as the NLW increases tomorrow (1 April) by 30p to £7.50 an hour for 25-plus-year-old workers.

The report said there was a small decrease in the number of employees across “low-paying occupations” this last year compared with 2015, which it said might reflect early signs of the higher minimum wage’s effect. It could also reflect broader changes to the labour market and economy and it is seeking more evidence to work out how employment will respond across the economic cycle.

However, the Association of Convenience Store’s (ACS) own research into the impact of the NLW suggests the former. The ACS has found that 74% of all convenience stores have had to reduce the number of staff hours because of the introduction of the £7.20 last April.

Some 76% of those that have had to lay off staff altogether in the last 12 months reported that this was because of increased employment costs.

The government’s stated intention is for the NLW is to reach 60% of median hourly earnings in 2020, which on current projections, would be about £8.75.

ACS chief executive James Lowman said: “Convenience stores of all sizes have faced significant increases in their employment costs over the last year through the introduction of the National Living Wage, two rises in the National Minimum Wage in 2016 and the phasing in of automatic pension enrolment.”

Its members said they were already having to make difficult decisions in their business because of rising employment costs, including reducing staff hours, taking on more hours in the business themselves and delaying investment plans.

“We will be engaging with the Low Pay Commission throughout 2017 to demonstrate the impact that continuing hikes in wage rates are having across our sector,” he said.

Tomorrow will also see an increase in the National Minimum Wage. The hourly rates for those aged 21-24 will rise from £6.95 to £7.05, 18-20 from £5.55 to £5.60, under 18s from £4-£4.05 and for apprentices from £3.40 to £3.50.

Readers' comments (4)

  • Good.Slavery was abolished.A fair days pay for a fair days work.Take less profit, and give your staff some dignity.

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  • The Living Wage and the Minimum Wage are alien to the basic principles of Economics - Market Forces of supply and demand.

    The disaster of government meddling with wages is that Productivity crashes whilst prices rise and wages fall. - our cost of living increases and our Standard of Living falls.

    We are seeing this now !!!!

    Get ready for the need for a Trillion and Billions of Pounds of Public Spending to convert our shops, restaurants, offices in our Shopping Streets to social housing.

    What an economic disaster???

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  • I don’t have a problem with arbitrary minimum wage providing they (the government) are also listening to the concerns of businesses who had to endure deflation for the last five years decimating our cash margins whilst the cost of running businesses has gone up. Everything from minimum wage, utilities, bank charges, and pensions – the list is endless. On the government side they have delivered a big fat zero on reviewing the hopelessly outdated local taxes namely local rates whilst allowing on-line businesses to get away with practically paying next to nothing. Coffee houses and the likes, our direct competitors on “food to go” are surprisingly paying hardly any either nor taxes. The ministers are also pressing a head to that £10 an hour in the not so distant future. Perhaps a level playing field comes to mind but than that doesn’t exist in the politicians vocabulary although they often make pompous statements on the very subject all the time. At the same time the politicians are duplicitous by allowing large corporations to look after shareholder value at the expense of workers they care so much about!

    Arjan Mehr Londis Bracknell

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  • Seasurfer1 , sonds like you could do with a change of career or a nice lay down in a darkened room.

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