Further National Minimum Wage (NMW) raises could hit retailers so severely that they would be forced to axe as many as 20,000 jobs.
The warning comes amidst fears that further rate increases are on the cards. As of 1 October the adult rate rose to £4.85 while the youth rate hit £4.10 and a new rate for 16 to 17 year old gives them the right to work for at least £3.00 an hour.
A recent British Retail Consortium (BRC) survey reveals that 44% of retailers say they would be forced to make job cuts if the Low Pay Commission (LPC) recommends an increase to £5.20. They say that a further increase would cost the sector £2.7 billion while they calculate that the current rate rise put a further £1.7 billion on their bill.
Dr Kevin Hawkins, BRC Director General, said: “There is clearly no justification for further increases to the NMW in real terms. The rise to £4.85 has already cost the industry £1.7 billion and already jeopardised jobs.
“The survey has confirmed retailer’s fears, that an ill thought out decision on this will hit every retailer hard. The retail industry employs 2.8 million people – 11% of the total UK workforce but many retailers will have no choice but to make job cuts.”
A spokesperson for the LPC told HRZone that it was currently carrying out a number of research projects to establish the impact of the National Minimum Wage and that it would be making its recommendations to government in February.
“It will be up to the government to decide whether they will accept our proposals next year but we cannot say at the moment whether our research will conclude us to propose a rate rise or not,” they said.
