Eye watering increases to employer NI contributions in this year’s UK Budget, alongside a 77p increase to the National Living Wage (NLW), could add around £2,400 to the cost of employing a full-time member of staff, Scottish Grocers Federation stated today (8).
Convenience staff across Scotland worked almost 500 million hours last year. Over 55,000 people are employed across the Scottish convenience sector, many of whom fall within the scope of the increase to National Insurance Contributions (NIC) and the NLW rise, meaning that together the changes could cost retailers tens of millions in additional outgoings. Despite the planned uplift in Employment Allowance relief from £5,000 to £10,500.
With a nearly a third of staff working between 17-30hr/wk (18 per cent less than 17hrs/wk), and many on or near the NLW, thousands of additional employees will require employer NI contributions. Where they didn’t need to pay much, if any, before.
A recent survey conducted by SGF, for its annual True Cost of Employment Report, shows that 74 per cent of retailers are now working more than 65hrs/wk, just to keep staff costs down.
SGF Head of Policy & Public Affairs, Luke McGarty, said: “Despite many retailers working longer and longer hours to keep staff costs down and many stores struggling to keep the lights on. Together with a plethora of new regulation directed at small local businesses, higher employment costs could now result in the Scottish sector paying tens of millions in additional outgoings.
“There is no doubt that local stores employing local staff will have to think twice before taking on anyone new or increasing staff hours. In some cases, it could be the final straw pushing retailers to reduce staff or even close the doors for good.
“Most local retailers simply won’t be able to absorb the extra cost and will either have to pass them onto customers, or reduce annual pay rises for hard working and long serving staff.
“We welcome the recognition of the additional support through the uplift in Employment Allowance, but for many that will only mitigate the damage. Small businesses and local shops are the lifeblood of the UK and Scottish Economies, providing a critical economic multiplier to boost local growth. Now is not the time to be penalising them for creating much needed local jobs."
The Scottish Government will publish its budget on 4th December, and SGF is calling on ministers to act cautiously on any proposals that could put small businesses under additional pressure.
