The Scottish Grocers’ Federation met with representatives of the Low Pay Commission (LPC) in London on Thursday (13) to raise concerns that soaring wage costs could hamper employment and put some small businesses at risk.
The meeting, held jointly with the Association of Convenience Stores, forms part of the LPC’s annual oral-evidence session. Testimonies gathered by the LPC, alongside responses to the annual consultation exercise, will inform the commissioners recommendations to government for the 2024-25 National Minimum Wage (NMW) and National Living Wage (NLW).
On 1st April this year, the UK NLW increased to £10.42, a 9.68 per cent increase on 2022-23. However, a collaboration between SGF and University of Stirling has revealed that the True Cost of Employment for retail is closer to £14 per hour. A jump of £1.25 or 9.8 per cent on the previous year and the highest increase of at least the past eight years.
The LPC currently estimate that the NLW rate required to meet its 2024 target will be in the range £10.90 to £11.43, with a central estimate of £11.16,seeing a further rise of up to £1.01 on this year’s NLW.
This comes at a time when the convenience sector is facing an extremely challenging trading environment. With stubbornly high energy bills, high 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.
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.
SGF Chief Executive, Dr Pete Cheema OBE, said, “Many convenience stores provide lifeline services and essential local employment for their communities. The never-ending pressure of absorbing more and more added costs, however, has put some businesses at risk.
“Many retail employees value the benefits of being able to work locally, and the ability to work flexible hours, but every significant wage increase leads to more staff hours being cut which has a damaging impact on local jobs and employment.
“The Commissioner and Ministers, in both Westminster and Edinburgh, must recognise that local convenience stores are vital economic drivers, that provide many benefits for their communities. On top of rising energy prices, business rates and regulatory pressures, our governments can and must do more to alleviate the growing pressure on our sector.”
Earlier this week, UK Chancellor Jeremy Hunt, and Bank of England governor Andrew Bailey, told delegates at the annual Mansion House dinner that wage restraint is required to curb high inflation. Highlighting the issue, the Chancellor informed attendees that “means taking responsible decisions on public finances, including public sector pay, because more borrowing is itself inflationary”.