The Association of Convenience Stores (ACS) says it is “disappointed” that the government has chosen to follow the Low Pay Commission (LPC)’s recommendations and significantly raise the National Minimum Wage (NMW).
The ACS warned that the inflation-busting 3% increase in the adult rate from £6.50 to £6.70 from 1 October – the largest real-terms increase in the NMW since 2008 – would have a negative impact on staffing and investment levels in the convenience sector.
James Lowman, the ACS’s chief executive, said: “We are disappointed with the increase in the National Minimum Wage above inflation, above average earnings growth, and above public sector pay award levels.
“Our research has clearly shown that retailers have little choice but to reduce staff hours and delay further business investment when the minimum wage is increased.”
The 2014 ACS Minimum Wage Survey showed that 88% of retailers had reduced staff hours within their business as a result of increases in employment costs, while 72% have increased their own working hours in order to reduce costs in their business.
ACS research has also shown that the majority of independent retailers believe that they earn less than the national minimum wage when their working hours are taken into account.
However, Lowman added that the ACS was pleased the government had not buckled under the political pressure and gone beyond the recommendations of the Low Pay Commission on the adult rate, the 18-20 youth rate – up 17p to £5.30 – and the 16-17 youth rate – up 8p to £3.87.
“We firmly believe that the Low Pay Commission is best placed to recommend the wage rates,” Lowman said.
The apprentice rate increase far exceeded the LPC recommendation – a 20% hike from £2.73 to £3.30 an hour compared with a recommendation of a 2.6% increase to £2.80. But Lowman said most of his members did not employ apprentices.
Ken Parsons, chief executive of the Rural Shops Alliance, said: “This represents a very worthwhile real increase in pay for the employees affected. It is, however, an unwelcome increasing costs for many employers.
“Over recent years, the government has been progressively increasing the cost to employers of sustaining jobs. They have increased holiday entitlement, maternity pay, made employers fully responsible for the cost of statutory sick pay and introduced a whole new pension entitlement with automatic enrolment. These all represent a very real cost to the employer, even if their staff do not necessarily recognise them as part of their remuneration package.”
National Federation of Retail Newsagents national president Martyn Brown said: “The Federation warned the Low Pay Commission and the government that independent retailers can no longer absorb the mounting overheads being enforced on them. We fear that this decision will lead to an escalation in retailers who can no longer afford the running costs of their shop resulting in their staff having their hours cut or even losing their jobs.”