The retail industry has criticised the government’s decision to approve the 1.9% increase in the National Minimum Wage, as advised by the Low Pay Commission.
From October 1 2013, the National Minimum Wage for adults will increase by 12p to £6.31 an hour while the 18-20 year-old rate will increase to £5.03 an hour and the 16-17 year-old rate climbs to £3.72 an hour. The apprentice rate will increase by 3p to £2.68 an hour.
Association of Convenience Stores (ACS) chief executive James Lowman said the increase would put jobs and business growth at risk.
“This increase will result in reduced employment and act as a barrier to growth for thousands of local retailers. In the current economic climate, the right decision for businesses would have been to freeze minimum wage,” he said. “Our research has shown that retailers have little choice but to reduce staff hours and delay further business investment when the minimum wage is increased.”
Recent ACS research highlighting the impact of National Minimum Wage increases revealed that 80% of retailers have been forced to reduce staff hours, 78% of retailers are increasing the number of hours they work themselves and 67% are delaying expansion or investment plans.
The Scottish Grocers’ Federation has also warned of the pressure this increase will put on retailers. “The UK government has ignored businesses and delivered another blow to community shops,” said chief executive John Drummond. “Staff costs are always the biggest costs our members have. This rise may lead to cuts in the number of staff or reductions to their working hours. The best way to protect local jobs and encourage investment would have been to freeze the national minimum wage at the current level.”
Drummond added that the overall cost to the retailer was likely to be higher than just the rate. “The actual cost to a retailer for a full time employee is likely to be £7.23 per hour when holiday entitlement and national insurance contributions are taken into account.”
Earlier this year, when giving evidence to the Low Pay Commission, employment minister Jo Swinson said the minimum wage was starting to have a “small adverse” impact on employment opportunities and cautioned against future increases.