Independent retailers warn of job losses and staff hour cuts due to rising costs

Independent retailers are warning of job losses and cuts to staff hours due to rising business costs triggered by increases in National Insurance Contribution (NIC) and the minimum wage.

A recent survey by the Fed revealed that 52% of respondents plan to reduce their workforce, while 67% intend to cut staff hours. Additionally, 80% of members stated that they would be compelled to work longer hours themselves.

The findings were published ahead of the impending increases in both the national minimum wage and employers’ NIC. From 6 April, the national minimum wage will rise by 6.7%, reaching £12.21 per hour, while employers’ NIC will increase from 13.8% to 15%.

The threshold at which employers begin paying NIC on employees’ salaries will also drop from £9,100 to £5,000.

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While 41% of businesses plan to raise prices to cover these rising costs, 42% say they cannot increase prices, as many of the products they sell are price-marked.

Meanwhile, many retailers are postponing plans to investment plans with only 21% intending to invest or refit their businesses and just 4% said they plan to introduce technology such as self-service tills.

Mo Razzaq, the Fed’s national president, said the “bigger than expected” rise in the national living wage is a “step too far for hard-pressed small businesses,” emphasising that while employers want to ensure they are paying fair wages, the additional financial burden is unsustainable for many independent retailers.

He added: “As well as paying our staff more in wages, we must pay more in national insurance and pension costs, at a time when many of our other costs, including energy costs, are rising. There is no easy way for small retailers to combat these increases.

“As our survey shows, the only solution available to independent shop owners is to reduce staff hours and staff numbers and, somehow, take on even more hours ourselves.”

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