Highlights
- Government retains two-thirds of median earnings target for 2026 minimum wage.
- Retailers face wage hikes alongside NIC rises, leading to price increases and reduced staff hours.
- Calls for phased NLW rollout and warns of tough decisions if rates rise too sharply.
Convenience stores retailers have welcomed the publication of the Low Pay Commission’s remit for minimum wage recommendations in 2026, which will retain the two-thirds of median earnings target.
Every year, the Government sets the priority areas that the Low Pay Commission should consider when making its recommendation for the next set of National Living Wage rates.
This year’s remit, published today (5 August), confirms that the Government has asked the Commission to ensure that the National Living Wage rate does not drop below two-thirds of median earnings.
The Commission has also been instructed to take into account the cost of living, inflation forecasts between April 2026 and April 2027, the impact on the labour market, business and competitiveness, and carefully consider wider macroeconomic conditions.
In its submission to the Commission earlier this year, convenience store body Association of Convenience Stores (ACS) outlined the measures that retailers are taking when faced with significant increases in their wage bills.
This year’s increase has been particularly challenging for many, as the National Living Wage increases were coupled with increases in Employer National Insurance Contributions (NICs) and a reduction in the threshold at which they start paying NICs.
The most common responses to increases in employment costs this year by retailers have been taking lower profits, increasing prices, and reducing the number of staff hours in the business.
The submission called on the Commission to take a measured approach to future headline rate recommendations that doesn’t exceed the current two-thirds of median earnings target and explicitly takes into account the impact of rising employment costs on businesses.
ACS has also recommended a phased approach to NLW eligibility, so that one age group at a time is brought into being eligible for the headline NLW rate instead of a direct jump from 21 down to 18.
The current central estimate for two-thirds of median earnings is £12.71 per hour, which would mean an increase of 4.1 per cent next year. However, the Commission has stated that there are challenges with predicting this figure accurately, so have predicted a range of between £12.55 and £12.86 per hour.
The LPC will make its final recommendations to Government by the end of October 2025.
ACS chief executive James Lowman said, “We welcome the sensible approach that the Government has taken in retaining the two-thirds of median earnings target for 2026, but the range of figures being considered for next year will still result in significant cost increases for retailers and subsequent difficult decisions, such as reducing paid working hours and delaying investment decisions.
"We will continue to work with the Commission to outline the impact of rising wages on our sector.”