SGF study reveals true cost of employment for convenience retailers

On 1 April, the UK National Living Wage will rise to £10.42, a 9.7 per cent increase on 2022/23. However, a collaboration between SGF and University of Stirling has revealed that the true cost for retail employers will be as much as £14 per hour. A jump of £1.25 on the previous year and the highest increase of at least the past eight years.

This comes at a time when the convenience sector is facing an extremely challenging trading environment. With rising energy bills, higher inflation and interest rates, and a cost-of-living crisis. The additional staff costs will inevitably be passes onto customers, many of whom are also struggling to manage their household budgets.

The study takes into account statutory costs, such as National Insurance and Holiday Pay, as well as additional expenses such as uniforms and administration costs. Meanwhile, a recent survey of SGF members shows that more than 70 per cent of respondents were less likely to hire more staff, due to the wage increases. With many working over 65 hours per week, just keep costs down.

“The increase in the headline figure for the National Living Wage brings welcome relief to many workers struggling with the cost-of-living crisis, but the true cost to retailers is much higher and comes on top of other pressures on the cost of doing business,” said Professor Leigh Sparks, University of Stirling.

“Convenience and smaller retailers need to have all these costs considered in the round and see a recognition and amelioration if they are to continue to provide their vital local services for communities.”

SGF Chief Executive, Dr Pete Cheema OBE, added: “Convenience stores provide a vital local service for their communities, but the pressure of absorbing all the additional costs is putting businesses at risk. Many simply can’t cope.

“Our members tell us that their staff value the benefits of being able to work locally, with flexible hours, but the significant increase to wages means that some stores will need to cut staff hours. Impacting of local jobs and employment.

“Both the UK Government and the Scottish Government need to recognise that local stores are economic drivers and provide many benefits for their communities. On top of rising energy prices, business rates and regulatory pressures, ministers can and must do more to alleviate the growing pressure on our sector.”

The True Cost of Employment 2023 paper will form part of SGF’s annual submission to the Low Pay Commission, for inclusion in its report and recommendations to the Prime Minister later this year.