The retail industry is expressing concerns that the National Living Wage (NLW) could increase by almost 6% to £12.10 next April, but it emerges that many forecourt operators are already paying more than this to recruit and retain staff.
In its latest report, the Low Pay Commission (LPC) said that the NLW needs to rise by about 5.8% to align with earnings growth. This is significantly higher than its March estimate of 3.9%, and a significant jump from the current £11.44 NLW for those aged 21 and above. Younger staff, aged 18 to 20, are legislated for with a different National Minimum Wage pay scale.
Forecourt operator Goran Raven says that he already pays £12.49 an hour, and increases the rate whenever there is a rise in the NLW. He also gives staff a £1 an hour pay rise after they have been employed at his business, Raven’s Budgens in Abridge, Essex, for 24 months to build loyalty and attract a higher calibre of staff.
“Looking at it from a short-term perspective it seems expensive. However, my staff retention is really good,” says Goran. “My average employment period for staff is nine years, and my longest serving team member, Siva, has now been with us for 25 years, and we recently presented him with a watch to celebrate.”
Creating staff loyalty, says Goran, means customers get used to famiiar faces and avoids long-term costs of continually recruiting and training.
Seb Hawtree says his family’s business, Hawtree & Sons Riverside Garage in Gillingham, Dorset, has historically always paid “quite a bit above” the NLW with a minimum hourly rate of £11.80. “Most of my staff are already above £12 at the moment,” he says. “We’ve always found it incredibly hard to recruit the right people for forecourts. I’ve always said that nobody wakes up and talks to their careers adviser at school wanting a petrol station job. Being a rural site, it’s even harder.”
But Seb does have concerns that the rise will have a wider negative effect on the industry. “If the National Living Wage goes to £12.10, we’ll very quickly be paying staff over £13 – very nearly £27,000 a year for a full-timer. Some retailers may cut hours. My worry is that will inevitably lead to poor store standards, potentially hazardous forecourts, and brand damaging sites. That’s absolutely not something we can consider. The cost will have to be passed on one way or another.”
Patrick Sewell, managing director of 13-strong forecourt chain Sewell on the go, says that while the proposed rise will be difficult for the industry to absorb, his Hull-based business sets its rates alongside the voluntary Real Living Wage, which takes into account the cost of living. Patrick pays all staff aged 18 years and above the £12 guideline figure for outside London set by The Living Wage Foundation.
“Undoubtedly, it is a challenge for all businesses as costs just keep rising, yet there’s much expectation that prices remain the same…It doesn’t compute!,”says Patrick.
Joseph Richardson, managing director of Jos Richardson & Sons, agrees and questions why the NLW consistently rises above inflation. Any increase, he says, will also have a knock-on effect to higher paid staff as well. “We find that our managers and team leaders are also very interested in the minimum wage because they are keen to see their differentials maintained,” says Joseph.
“We have a lot of cost pressures in the business, and this just adds to it. It just adds weight to the argument made by retailers and the PRA that historic fuel margins are no longer of any relevance when setting prices today.
Henderson Retail, operator of 84 forecourts in Northern Ireland, pays its staff aged 21 and above £12.05 per hour, to reward them “with a fair and competitive rate of pay ahead of the market”.
And Ben Lawrence, director of Lawrences Garages, who pays above the current NLW without differentiating on age, says that the proposed increase is a concern, as utility bills increase and margins are squeezed in other areas.
“But the main issue really is getting people to actually join the retail sector as it’s been a struggle to employ people even with us increasing well above the minimum wage,” he says.
“Hearing the news about all the abuse front line staff have to endure on a daily basis and shift patterns including weekends, it is not a desirable job.”
The 5.8% increase was projected after the new Labour government updated the LPC’s remit to formally factor in the “cost of living” when undertaking the annual review into the minimum wage. Its recommendations will be delivered next month.
The Federation of Independent Retailers has warned the government that the move could be “a step too far for hard pressed small businesses”, and that it needs to “carefully consider the impact of higher wages on independent businesses in the months and years ahead so that our members can continue to thrive”.
