Retailers from the small independents right through to Tesco will face a combined £1.1bn in extra costs and lose an estimated 35,000 jobs if next year’s increase in the national minimum wage goes through.
The stark warning from the British Retail Consortium came as the organisation called for a fundamental review of the wage hike process, in terms of which the minimum wage will increase by 5.9% next October from £5.05 to £5.35.
In addition, a study conducted by Spar of 400 of its retailers revealed that 95% had already experienced reduced profit because of minimum wage hikes. Some 41% were now employing fewer staff and 53% had cut investment in the business - as a direct result of the forced wage rises.
The BRC said the minimum wage, which already increased by 4.1% from £4.85 in October this year, costing the industry an additional £1.2bn, had reached a “tipping point” and impacted all sizes of retailers from the small independents to the major multiples. In all, retailers would have seen a 10.3% increase to their wage bills in the two years to next October .
In a survey published this week, the BRC found that 11% of retailers would consider job cuts if the proposed increase went through next October.
In its submission to the Low Pay Commission, the BRC also said this week that retailers could not go on absorbing increases into their fixed costs.
“The time has come for the LPC to ask the government for permission to conduct a fundamental review of the national minimum wage,” said BRC director general Kevin Hawkins. He added: “Another increase in October 2006 would have serious repercussions for the industry. Passing on even a small proportion of this increase to the consumer has become virtually impossible.”