Rising cost of living wage piles pressure on convenience retailers, says Low Pay Commission

The Low Pay Commission have published new analysis on the impact of the National Living Wage on businesses since its introduction in April 2016, recognising the impact that the wage rate has already had on the convenience sector.

The Commission’s analysis noted that convenience stores had reported a decrease in working hours and jobs as a result of the National Living Wage, and that this was a threat to the long-term sustainability of many retailers. Commenting on the figures, Sir David Norgrove, chair of the Low Pay Commission, said that employers in sectors such as convenience and horticulture had highlighted “significant pressures” in dealing with the National Living Wage.

The Commission’s analysis comes after Chancellor Philip Hammond announced that the National Living Wage rate for 2017 would rise to £7.50 per hour, an increase of 4.2% on the previous year. The adult minimum wage rate is set to reach £7.05 in April 2017, an increase of 3.2% on the previous year.

ACS chief executive James Lowman said: “In the context of low retail margins and economic uncertainty, an increase in the National Living Wage of over 4% will be tough for retailers to absorb in their businesses. We fear we will continue to see retailers delaying investments, reducing staff hours, and taking on even more hours in the business themselves.

“We are pleased that the Low Pay Commission has again undertaken a thorough and objective economic analysis. They should be able to set minimum pay rates based on this, rather than having to work to arbitrary politically-motivated targets. We also need to see more action from the Government to mitigate the increase in National Living Wage by reducing business rate costs, government funding of statutory sick pay and further reductions in employer national insurance contributions.”

In its submission to the Low Pay Commission earlier this year, ACS highlighted that 74% of retailers had reduced the staff hours in their business as a result of the introduction of the National Living Wage, with 65% increasing the number of hours they work in the business themselves and 15% reporting that their business was less competitive as a result.