ACS has warned ministers that significant hikes in the National Minimum Wage and National Living Wage rates announced today will put further pressure on struggling high street businesses.
The Government have today announced what it calls ‘the biggest cash increase ever’ in the National Living Wage rate. At £8.72 per hour, the National Living Wage will rise by 51p in April from its current rate of £8.21.
From April 2020, the new rates will be as follows:
- The National Living Wage for ages 25 and above - up 6.2% to £8.72
- The National Minimum Wage for 21-24 year olds - up 6.5% to £8.20
- For 18-20 year olds - up 4.9% to £6.45
- For under 18s - up 4.6% to £4.55
- For apprentices - up 6.4% to £4.15
The new rates have been recommended by the Low Pay Commission, and have now reached the target set by the Government in 2015 of the NLW equalling 60% of median earnings by 2020. The Chancellor has indicated that he will recommend a target of two thirds of median earnings for future wage rates by 2024.
ACS chief executive James Lowman said: “Every week we hear more about the challenges facing high streets, particularly secondary centres away from major cities. 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.
“Convenience stores offer a wide and growing range of products and services, often stepping in where other businesses have closed, but these require people to deliver them - 405,000 people work in our sector. 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.”
Findings from ACS’ National Living Wage survey suggest that retailers are already taking action to deal with the most recent increase in the National Living Wage in April 2019:
- 72% of retailers have reduced the number of paid working hours in their business
- 64% have seen a reduction in the profitability of their business; and
- 52% of independent retailers have had to take on more hours in the business themselves
The full announcement from the Low Pay Commission about its wage recommendations for 2020 is available here: https://www.gov.uk/government/news/national-living-wage-to-hit-60-per-cent-target-in-april
