In about six weeks’ time, hard-working convenience retailers will encounter a ‘perfect storm’. Despite seeing it looming large on the horizon, its arrival is inexorable.
I am talking about the scheduled increases in April to the National Living Wage and the employer national insurance contributions.
All this at a time when retailers find themselves amidst a cost-of-doing-business crisis.
From 1 April, the National Living Wage will rise to £12.21 for those over the age of 21. It marks a 6.7% increase on the previous year. To put that in context, retailers are paying £5.01 per hour more for the National Living Wage now, when compared to 2016. It is right that staff are paid fairly, but within a range that retailers can reasonably afford to pay while still being able to employ staff and run a viable business.
Increasing pay for those covered by the National Living Wage has an unintended con-sequence of pushing up wage costs for all staff as pay differentials need to be maintained to attract employees to more senior roles.
Increase in National Insurance contributions will add to the pressure on retailers
Sadly, on top of this, the start of April will also see the chancellor’s decision to increase national insurance employee contributions from 13.8% to 15% take effect. This will change the threshold at which employers must start paying the contributions, with it being lowered from £9,100 to £5,000.
The convenience sector, however, already pays its way, as the Scottish Grocers’ Federation (SGF’s) Scottish Local Shop Report 2024 indicates. Over the past year, convenience stores across the UK paid £285m in employee national insurance contributions and provided over £9.4bn in taxes.
The UK government appears to have the impression that independent retailers have access to a money tree, but that is simply not the case.
They need to sit up, read the room and realise that the convenience sector is a vital part of universal infrastructure of this country. And if that role is to continue, they need to stop adding to the cost of doing business or risk, in the long run, reducing the number of businesses remaining to contribute to the tax base.
Read more of our expert opinion on the independent retail sector
Comments
This article doesn't have any comments yet, be the first!