Store owners are to escape paying workers within all age bands the full National Living Wage next year. Despite pledging to remove “discriminatory” age bands for the National Living Wage, the Labour government has 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.
This means shop owners could continue to save money by paying those aged under 21 at a lesser rate than those aged over 21 years old.
In its manifesto, Labour also pledged to consider the cost of living within the remit of the Low Pay Commission, which has now been delivered.
The government also asked the Commission to:
- Ensure the rate for workers aged 21 and over does not fall below two thirds of median earnings
- Consider the impact of its recommended rate on business, the labour market, competitiveness, the wider economy, and the cost of living, as well as inflation trends
The ACS has submitted evidence to the Low Pay Commission to highlight the challenges retailers face in adapting to rising wage rates, including reducing investment in business (53% of stores), increasing prices (53% of stores), reducing staff hours (47% of stores) and taking lower profits/absorbing the costs (47% of stores).
ACS chief executive James Lowman said: “It is essential that the Commission considers the impact of rising wage rates on both sides of the labour market, so we are encouraged by the inclusion of business impact within the remit this year.
“Our members are already telling us that wage rates are having a negative impact on investment, which will make it harder to trade, diversify and remain competitive in the future. The Commission should study the impact on this sector and other businesses and ensure future wage rates do not intensify the problems facing retailers and stifle wider economic growth.”
The rate of the National Living Wage has increased from £8.91 per hour in 2021/22 to £11.44 per hour in 2024/25, said ACS, an increase of over 28% in the last three years which has brought the National Living Wage rate up to the previous government’s target of two-thirds of median earnings.
A final report in response to the remit will be published by the end of October 2024.
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