Cutbacks fear as minimum wage hike back on agenda

Politicians have been warned: increase the national minimum wage and it could have a seriously detrimental affect on independent stores. 

Retailers have hit out at the plans, stating that a rise would force them to cut back on staff and result in longer hours for remaining staff.

“It’s the easiest option to pick – they think Tesco can afford to pay more, but don’t look at small businesses with five staff,” said Spike Millican, from S&A Superstore, Uttoxeter. “And when the minimum wage goes up, other higher-up staff start asking for rises too.”

Kishor Patel, who has Nisa Local stores in Hemel Hempstead and Stevenage, added: “If it goes up it will absolutely affect our staffing levels. I think it will also create a bigger black economy with people working off the books.”

The backlash came as the national minimum wage moved firmly back on to the political agenda and Labour leader Ed Milliband unveiled plans to increase the rate to £8 an hour by the year 2020.

Both the NFRN and ACS have made submissions to the Low Pay Commission for the next round of talks, outlining their members’ concerns. The NFRN stated that 25% of its members have cut back on staffing levels since the last increase and, it warned, if it went up again in 2015, many retailers would no longer be able to afford running costs.

“The NFRN and its members understand the benefits for employees of a rise in the NMW, however many cannot maintain their businesses and afford the rise in costs,” said NFRN chief executive Paul Baxter.

ACS figures suggested that more than half its members questioned said their businesses were less competitive, six out of 10 had laid off staff, with 71% of these blaming it on increased employment costs.

Would you have to cut back on staff if the national minimum wage increases? Let us know in the comments section below.