The Fed has urged the business and trade minister Jonathan Reynolds to consider the impact national living wage increases will have on retailers.

The president of the trade body, Mo Razzaq, has written to Reynolds in an attempt to highlight the impact of higher wages on smaller businesses.

In the letter, Razzaq wrote that the Fed “recognises the importance” of providing a living wage for those who work in shops and ensuring that staff “receive a fair wage” for their work.

He added: “We fully support the minimum wage the Labour government introduced in 1999 and its development into the Living Wage we have today. However, we also encourage you to carefully consider the impact of higher wages on independent businesses in the months and years ahead so that our members can continue to thrive.

“As you will be aware, our shops are faced with rising energy costs and competition from larger supermarkets – leaving many of our members to actually pay themselves less than the living wage.

“Furthermore, many of their goods tend to be price marked, meaning they are unable to increase prices to cover additional payrolls costs, which also include National Insurance and pension contributions.

“As always, we feel that there is a valuable balance to be struck between the welfare of employees and the vital sustainability of our smaller shops, so wages can be afforded and paid in the first place.”

Razzaq also expressed concerns about equalising the minimum wage across all age ranges, as paying a lower wage for young, inexperienced workers reflects the additional investment in training that they need and allows shops to be able to afford to employ vital younger staff as needed.

Despite pledging to remove “discriminatory” age bands for the National Living Wage, in July the Labour government asked the Low Pay Commission to establish a separate pay rate for 18-to-20-year-olds in 2025, but with a view to removing age bands for the minimum rate in the future.

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