There’s probably no government policy that affects a retailer’s bottom line more than the National Minimum Wage. Planning, policing, alcohol licensing and tobacco regulation can all have a profound impact on the business, but when it comes to pure financial impact, retailers tell us that the decision on the minimum wage rate is the one that has most bearing on their profitability.
The process the government adopts is to allow the Low Pay Commission, made up of people with experience ranging from trade unions to business to academia, to come up with a recommendation for the minimum wage rate. Thus far, the government has accepted every recommendation from the Commission on the headline rate.
Given this, our job is to try to influence the Low Pay Commission’s thinking, and we do this through providing survey data, explaining the impact of the minimum wage on retailers, taking Commissioners to see retailers in their businesses, and giving face-to-face evidence to the Commission. The way to influence this process is through providing information and giving real examples of how retailers respond to the minimum wage.
This year, we went a stage further by running the first minimum wage focus group for our sector, attended by independent retailers from forecourts and c-stores. The messages that came from this were very clear. Firstly, it is staff who are paying for increases in the minimum wage through reduced hours, redundancies, eroding differentials for higher paid staff, and salaried staff working longer hours.
Secondly, increases in the minimum wage affect decisions to invest. The payback period for investments becomes longer when costs rise, and that can undermine the case for a re-fit or buying a new store. Thirdly, the profile of staff employed changes. Retailers are more likely to employ younger staff (for whom there is a lower rate) or to keep staff under the National Insurance contributions threshold for working hours to compensate.
There are literally hundreds of groups making their views known on this issue, but I hope that the focus group will have helped us get the messages across more clearly.
The retailers who took part should be proud to have given time to an issue that is so crucial to our industry.