From October, the adult minimum wage rises from £5.35 an hour to £5.52, a rate recommended by the Low Pay Commission.
The 3% increase was described as “sensible” by Association of Convenience Stores chief executive James Lowman. “Compared to previous increases, this is more affordable for our sector,” he said. “Retailers will be relieved not to be facing the huge rises that have taken place in previous years.”
He pointed out that retailers would struggle to absorb other costs, including the impending changes to holiday entitlement and compulsory pension contributions, which cannot continue rising indefinitely.
Kevin Hawkins of the British Retail Consortium (BRC) said: “This is good news and exactly what we asked for. Hard-pressed retailers have had to cope with a £2.7 billion hike in wage bills caused by the previous two above-inflation increases.
“With energy prices, rents, rates, and service charges also on the increase, cutting costs by employing fewer people would have been one of the few ways retailers could have accommodated another inflation-busting increase.”
He added that the BRC hoped there would be no real-terms increase next year, and that the Commission will produce a more predictable formula for future changes.