Massive rise would hurt businesses and costs jobs, warn independent retailers

Jobs will be slashed and wage bills will soar if Chancellor George Osborne delivers a proposed inflation-busting national minimum wage rise, retailers have warned.

Osborne is under pressure from his own party to hike the minimum wage according to newspaper reports, and is ready to approve a rise of as much as 50p before the general election in 2015.

This equates to an extra cost of £1,040 for one full-time employee on the minimum wage working 40 hours a week throughout the year.

Coventry retailer Paul Cheema employs 40 members of staff, and most are on the minimum wage. The impact on his convenience retail estate would be huge.

“A 50p rise would cost jobs,” he said.

“As a retailer your staffing costs remain the same. If they put the minimum wage up there will be job cuts and that’s the biggest fear. That puts the onus on the retailer to work longer hours. The bottom line is that there will be casualties.”

In the Chancellor’s Autumn Statement retailers learned shops with a rateable value of less than £50,000 will get a business rates discount of £1,000. But this would quickly be clawed back by an inflation-busting wage hike. The NFRN is writing to Osborne as a matter of urgency to warn of the damage that would be caused.

NFRN national president Colin Fletcher told Retail Express: “This would have a serious impact on small independent businesses, as increases in staff costs could result in cuts in hours, job losses and even store closures, robbing communities of a valuable lifeline.”

Wolverhampton retailer Shailesh Parekh employs 26 people across his Lifestyle Express estate and wages account for half of his costs.

He said: “I want to employ more people but I won’t be able to. And you can’t pass the costs onto your customers because they don’t have the money to afford it.”

He called on the Government to give independent retailers extra tax breaks if it is determined to increase the national minimum wage.

The Liberal Democrats have already accused the Conservative party of ‘stealing’ their policy on the minimum wage, showing just how important the political parties think wages are for winning votes.

James Lowman, chief executive of the ACS, said it is vital this issue does not become a political football.

He said: “If we are not careful, the result of increasing minimum wage will make bringing in more staff unaffordable, prevent growth and investment and reduce the income of the smallest retail entrepreneurs to crisis levels.”