ACS urges caution on further minimum wage increases

The Association of Convenience Stores (ACS) has urged caution on further National Living Wage (NLW) increases, noting that the labour market in a state of flux due to the furlough scheme, the EU exit, Covid testing and isolation and other factors.

Attending an evidence session by the Low Pay Commission (LPC), ACS chief executive James Lowman highlighted the impact of the tightening labour market and rising wage rates have on convenience retailers.

“Convenience stores provide local, flexible and secure employment to hundreds of thousands of people across the UK but these are extraordinary times for the labour market, with existential challenges facing many businesses employing at or close to statutory minimums,” Lowman said.

“Our evidence suggests that the Low Pay Commission should take a measured and cautious approach when setting wage rates for next year to allow businesses and the wider economy time to recover. This means caution now, then waiting to see how the labour market adjusts and whether the timeframe for statutory wage rates to reach two thirds of median earnings beyond 2024 remains the right approach.”

Findings from ACS’ National Living Wage Survey 2021 have shows that convenience retailers have primarily responded to the £8.91 NLW rate by taking lower profits (68%), increasing prices (48%) and automating certain processes (44%).

Almost two thirds of convenience retailers (58%) believe that the planned increase to the NLW to £10.33 in 2024 would impact their business investment plans and could have a negative impact on the number of employees in their business (63%)

The LPC, the independent body which advises the government on the levels of the NLW and National Minimum Wage, will make the recommendations this autumn on the 2022 minimum wage rates.

The commission’s current projection for next April’s National Living Wage rate is £9.42, with a likely range of 7 pence above or below this figure. This year, the rate increased to £8.91 and the age threshold for the rate reduced from 25 to 23.