Small UK shops could suffer from job losses and falling recruitment levels due to the government’s decision to raise the minimum wage to £4.85 an hour, the British Retail Consortium (BRC) has warned.
Ministers confirmed this week that, in addition to a £3-an-hour minimum wage for 16 and 17-year olds, basic pay for over 21s will rise from £4.50 to £4.85 in October.
The decision was based on the recommendation of the Low Pay Commission, which advised that the minimum wage should rise due to the continued strength of the economy.
However, the BRC claimed the government had not fully considered its actions and warned that the rise will have a “severe impact” on wage differentials, recruitment and even trigger redundancies.
Small businesses with tight budgets have been critical of the rapid increase of the minimum wage, which went up just last autumn. Business groups have warned that basic pay should edge up slowly to avoid employees being priced out of the reach of small firms.
Conversely, union leaders have urged the government to press ahead and grant every worker at least £5-an-hour, arguing that the minimum wage has not resulted in the mass job losses predicted when it was first introduced in 1999.
Amanda Miller, director of retail services at the BRC, said that the retail sector employs 2.8 million people – 11 per cent of the UK workforce.
“An ill-thought out decision on this will hit retailers hard. We are only relieved that the wage did not rise above the Commission’s recommendations, as feared last week.
“The government was cautious with the level for 16-17 year olds, setting the wage at a sensible level in line with current economic conditions.
“We are disappointed that the same approach wasn’t adopted for the adult wage and apprehensive about what the Commission might recommend in the future,” she said.
