ACS has called on the Low Pay Commission to consider the critical impact of rising employment costs in the context of major cost of trading challenges for local shops.
In an oral evidence session at the Low Pay Commission in London today (16 July), ACS has outlined the mounting pressure facing retailers as a result of higher employment costs, a challenging labour market, reforms to employment rights and a wider cost of trading crisis.
Findings from ACS' 2026 Employment Survey show that convenience retailers are already being forced into difficult decisions in response to the cost increases hitting their businesses this year. Two thirds of retailers are reducing the number of paid staff hours in the business, with more than half of store owners taking on more hours themselves to offset the shortfall. Half of retailers surveyed are actively reducing investment.
ACS’ calls on the Commission come as retailers are dealing with significant business rates increases, changes to employment law to introduce statutory sick pay from the first day of absence and energy price uncertainty, whilst still reeling from recent increases in employer National Insurance costs.
Recommendations made to the Low Pay Commission to mitigate the rising cost of employment include:
- Moderate future wage increases to reflect the pressure on local shops and other employers
- Consider carefully the business and labour market impact of rising wage rates
- Go no further than the current two-thirds of median earnings target
- Continue the phased approach to lowering the age of entitlement for the NLW
ACS chief executive Ed Woodall said: "Local shops have faced several years of above inflation increases to the National Living Wage alongside hikes to their National Insurance contributions, increased sick pay costs, higher business rates and persistent inflation. This cumulative burden cannot just be absorbed, so retailers are responding in the only ways left available to them - cutting staff hours, scaling back investment, and in many cases working far longer hours themselves just to keep stores open.
“Convenience stores need to be able to invest in their offer, their services and their people to stay relevant and viable, but that's only possible with stability and restraint in the cost increases they face."
ACS launched its Checkout the Cost of Trading campaign earlier this year, urging retailers to contact the Chancellor to explain how cost increases like the increases in National Living Wage and the introduction of the Employment Rights Act are affecting their ability to invest and grow. The campaign hub is available here.
The Low Pay Commission is set to make its formal recommendation on the future of the National Living Wage in October ahead of the Autumn Budget. The median estimate for the National Living Wage rate for 2027-28 is currently £13.18 per hour, representing a 47p increase on the 2026-27 rate.
ACS' full written submission to the Low Pay Commission is available here.
