Trade bodies have reacted with concern to the significant hike in National Living Wage (NLW), which will come into effect on 1 April 2020.
Government has announced a 6.2 percent increase in the NLW, taking the wage for over 25 years olds from £8.21 to £8.72.
NFRN, in a statement, noted that the move will be a treble whammy for “already suffering” independent high street outlets as the rise will also trigger increases in employers’ national insurance and pension contributions.
“We all want to be able to pay our staff more, to reward them for their hard work during the year, but above inflation increases will put even more pressure on local stores, many of whom have already had to cut staff in order to meet the increased payroll costs associated with the introduction of auto enrolment pensions,” said Stuart Reddish, national president of NFRN.
“Many retailers rely on family members to help run their stores and already are unable to pay themselves the living wage for the hours that they work,” he added.
Earlier, the Association of Convenience Stores has also warned that the ‘significant hikes’ will put further pressure on high street businesses.
“The fact is that rising wage costs are the biggest single factor among many issues impacting all types of retailers, and there is a tension between the desire to raise wages for the lowest paid and the need for viable shops and vibrant high streets,” said James Lowman, chief executive of the ACS.
“This increase in minimum wage rates – which is four times the rate of inflation – will have an impact on investment, reduce staff hours for many employees working in the sector, and force retailers to work even more hours in the business themselves to make up the shortfall.”
Reddish urged the government to support and not penalise retailers in its quest to increase the living wage.
“The government has committed itself to raising the living wage to over £10 an hour. If this is to be achievable without destroying the independent retail sector then the Prime Minister needs to use his majority in the House of Commons to take urgent steps to support rather than penalise retailers.
“Reforming the dysfunctional business rates system would be a good place for Mr Johnson to start,” he said.
The ACS’ National Living Wage survey has found that almost three-fourths of retailers (72%) have reduced the number of paid working hours and over half (52%) have had to take on more hours themselves following the increase in the NLW in April 2019.