The National Living Wage, which came into force today (1 April), will have a serious impact on the convenience store sector, the ACS has warned.
For all employees aged 25 and over, the new minimum rate of pay will be £7.20 per hour.
The Chancellor announced the National Living Wage as part of his 2015 Budget without consultation with the Low Pay Commission, and has signalled his intention for the rate to reach at least £9 per hour by 2020.
ACS chief executive James Lowman said: “The introduction of the national living wage will have a serious impact on many of the 51,000 convenience stores in our sector. Over 60% of stores in the sector will look to reduce the number of staff hours in their business and delay investment plans, while for some already operating on the edge of profitability it will mean that they will have to either stop employing staff or close their business altogether. Plans to hike wages up to £9 per hour by 2020 will certainly close some stores. An escalating living wage will cost jobs and investment every single year.
“We support minimum wage rates, and agree that these may vary for different age groups. However, these rates should be determined by the independent Low Pay Commission, not by politicians. Our members work some of the longest hours in the country, and the national living wage will force them to work even longer to remain viable.”
A survey of over 1,000 convenience store owners from May 2013 showed that the majority (55%) believed that they earned less than the minimum wage when their working hours were taken into account. The 2015 Local Shop Report showed that a quarter of convenience store owners work more than 70 hours per week, with one in five taking no holiday at all throughout the year.
ACS has estimated that in 2016, the introduction of the living wage at £7.20 per hour for workers over 25 will cost the sector in excess of £167m. When asked about the impact of the Living Wage, retailers said that they would take the following steps to keep their business afloat:
- 62% said they would delay investment or expansion plans
- 61% said they would reduce staff hours in their business
- 58% said they would reduce the number of staff in their business
- 40% said they would have to increase the number of hours that they work in the business themselves
For workers under the age of 25, the National Minimum Wage (currently £6.70 per hour) still applies. Full details on the rates of National Living Wage and National Minimum Wage are available here: https://www.gov.uk/national-minimum-wage-rates