A survey of independent retailers has found most are considering cutting employee numbers or reducing staff hours due to tomorrow’s increases in National Insurance and Living Wage obligations.
After polling its members, the Federation of Independent Retailers reports that 52% are cutting back on their workforce, while 67% plan on reducing the number of hours they rota staff for.
Eight out of 10 of the 269 independent retailers polled by the organisation said they plan on working more hours themselves to make up for these reductions, while 40% would be putting shop prices up to absorb increasing costs.
The start of the new financial year brings with a rise in the National Living Wage, which goes from £11.44 an hour to £12.21. Employer National Insurance Contributions also increase, from 13.8 to 15%, while the threshold at which employers have to pay NICs drops from £9,100 to £5,000.
Tom Buckley, a director at Pricewatch Group, says that staff costs represent the biggest expense for most retailers, but that his firm had attempted to factor in April’s increasing costs ahead of time, by issuing “revised staffing budgets to all sites” at the start of the year.
Buckley explains that “absorbing additional costs has proven to be unfeasible” in the current economic climate, while increasing the prices for goods risks making businesses uncompetitive because “if others don’t follow, you’ll just end up uncompetitive”. Buckley also warns that while announcing wage increases “makes great headlines”, the government “may not have fully considered the implications of their statements”.
Oliver Blake, of Oasis Services, Hull, said his firm’s rota is “as streamlined as we can be” without resorting to lone working, a status partly facilitated by the fact the majority of his staff are part-time, meaning Oasis’ NI contributions can be kept to a minimum.
The Federation of Independent Retailers’ president, Mo Razzaq, says that “a bigger than expected rise to the national living wage to £12.21 an hour from April 2025 is a step too far for hard-pressed small businesses”, not least given energy costs had also been increasing.
He added: “There is no easy way for small retailers to combat these increases. As our survey shows, the only solution available to independent shop owners is to reduce staff hours and staff numbers and, somehow, take on even more hours ourselves.”
