New minimum wage may raise costs by 13% for retailers
28 Sep '07
4 min read
Retailers are calling for more certainty about the National Minimum Wage (NMW) as new figures show the size and knock-on effects of last year's increase cost retailers £1.7 billion, 13 per cent more than expected.
On the day the 2007 increase comes in (Monday 1 October), the British Retail Consortium (BRC) is publishing the results of its annual NMW survey of retailers. It shows the impact of last year's six per cent increase was felt well beyond simply the cost of pay rises for those on NMW.
Retailers' efforts to maintain differentials for those higher up the pay hierarchy, at a time of higher than expected inflation, added £200 million to the £1.5 billion NMW cost they had budgeted for.
Between 2006 and 2007 retailers' total wage bills for shop floor staff rose by 12 per cent, three times more than inflation, to £25.8 billion. More than half that increase was a result of the £1.7 billion that rising NMW added to wage bills.
At the same time other cost pressures, including energy, rents and rates also shot up while the prices retailers charge customers actually fell. The BRC says retailers need a more measured and predictable framework for future NMW increases.
BRC Director General Kevin Hawkins says: “Past minimum wage increases have appeared to emerge from an attempt to balance competing bids from business and unions rather than being genuinely based on economics.
“After four previous inflation-busting rises, we recognise the Low Pay Commission gave businesses some respite by recommending this year's three per cent increase but last year it was six per cent, and four per cent and eight per cent the years before that.”
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