Increasing wage costs impacting retail trade, says ACS

10 July 2017

Independent shopkeepers, including subpostmaters, may be forced out of business unless the government takes urgent action to mitigate the detrimental impact of meeting National Living Wage obligations and other employment costs, according to the Association of Convenience Stores (ACS).

In its annual submission to the Low Pay Commission, the ACS has raised concerns about the measures that retailers are being forced to take as a result of the national living wage increasing to £7.50 per hour in April 2017.

The ACS said more than three-quarters of convenience stores (78%) have reduced the number of staff hours in their business, while almost half (48%) have had to reduce the number of staff they employ in store.

Almost two-thirds (65%) of store owners have had to increase the number of hours they work themselves and 78% of convenience stores believe the increase in the national living wage in April 2017 has made their businesses less profitable.

ACS chief executive James Lowman said: “Increases to wage rates have had a significant effect on the convenience sector, with jobs being lost and already overworked store owners having to pick up more hours themselves to make up the shortfall. We urge the Low Pay Commission to take into account the negative impact that wage rises are having on businesses and to ensure that any future rises in the national living wage do not damage UK employment prospects.”

An ACS survey showed 75% of independents wanted to see a freeze in the National Living Wage next year. The government’s current target is for the national living wage to reach 60% of median earnings (currently projected at £8.75 per hour) by 2020.

Lowman said: “Outside of the wage rates themselves, the government needs to do more to help mitigate the impact of rising wage costs. Helping with the £33.7m annual cost of statutory sick pay, reducing the cost of business rates and extending the Employment Allowance should all be considered as effective ways to help businesses continue to trade.

“If nothing is done and businesses are faced with continued annual hikes in the national living wage and minimum wage, product costs will increase, employment will fall and ultimately, some businesses will be forced to close as a result.”

ACS will be giving oral evidence to the Low Pay Commission on July 18.