ACS warns raising living wage above two-thirds median earnings will harm retailers

The Association of Convenience Stores is warning that pushing minimum wage rates above two-thirds of median earnings could stifle investment in the sector and “intensify the problems facing retailers”.

It comes after the new government issued its ‘remit’ to the Low Pay Commission (LPC), the body that recommends the level of the minimum wage, paid to workers under 21, and the national living wage. Part of the remit is to ensure those over 21 are paid an hourly rate equivalent to at least two-thirds of the median amount earned by all employees in the country.

The Department for Business and Trade has also tasked the LPC with proposing a separate rate for 18-20 year olds in 2025 with a view to removing age bands in the future, as well as instructing its members to take into consideration the impact on business and the wider economy.

Every year, the LPC gathers evidence from businesses, workers and other parties about the impact of the national living wage, which is followed by a recommendation to government on what the following year’s rates should be. The LPC also considers the inflation rate and other cost of living indicators.

ACS chief executive James Lowman said he is “encouraged” by the requirement from the government for the LPC to consider the business impact of any recommendation. However, he cautioned: ”Our members are already telling us that wage rates are having a negative impact on investment, which will make it harder to trade, diversify and remain competitive in the future. Further increases beyond the two-thirds of median earnings threshold will only intensify the problems facing retailers and stifle wider economic growth.”

The rate of the national living wage has increased from £8.91 per hour in 2021/22 to £11.44 per hour in 2024/25, an increase of over 28% in three years which has brought the level up to the previous government’s target of two-thirds of median earnings, says the ACS. 

The LPC will report its recommendations for 2025 in October.