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The tough decisions many retailers are having to make following the latest National Living Wage increase, such as reducing business investment and taking lower profits, have been flagged up by the Association of Convenience Stores (ACS) in its submission to the Low Pay Commission (LPC).

Following April’s National Living Wage increase of 9.7%, up from £9.50 per hour to £10.42, 50% of convenience retailers surveyed in the ACS’ latest National Living Wage survey are reducing the amount they invest in their business. The ACS pointed out to the LPC that this was a significant shift up from 33% in 2022 and 20% in 2021.

What’s more, 56% of respondents stated their intention to reduce the hours they employ their staff for, up from 42% in 2022 and 36% in 2021. 

In addition, over two-thirds (69%) of stores are taking lower profits, while 50% are automating certain processes.

The survey also found that three-quarters of convenience employers claim to have found it harder to recruit staff in the last year, while 67% have found it more difficult to retain staff.

As a result of its findings, the ACS has called for the LPC to adopt “a cautious approach” to the setting of future NLW rates.

ACS chief executive James Lowman said: “The convenience sector is a prime example of genuine two-sided flexibility in the labour market, providing local, secure and flexible jobs to hundreds of thousands of people across the UK.

“It is important that future wage rates are approached with caution, set independently of political targets and that decisions are made in the context of the economic climate. An ‘emergency brake’ mechanism to suspend uprating when wage rates have a detrimental effect on employment opportunities could prove crucial.”

ACS has put forward a number of factors which would signify negative impacts on the economy and the labour market, which could trigger the ‘emergency brake’, these include: limited in-work progression, decreased attractiveness of entrepreneurship compared to employment and adoption of gig economy models.