The retail sector will have to commit £3bn every year to pay for the National Living Wage, which came into effect on Friday.
Research from the British Retail Consortium has found that by 2020 retailers will have to find an additional £3bn a year to pay staff at the new minimum wage, though this rests on the assumption that current differentials between entry and mid-level staff will remain, and that the NWL will be offered to all employees rather than just those over 25.
According to the Low Pay Commission, over a fifth of workers over 16 earning minimum wage are employed by the retail sector. With the introduction of the NLW, retail will instantly become the biggest minimum wage employer in the UK, with 23% of the total number of workers earning the new £7.20 an hour. This, coupled with the size of the retail industry and the further increases to wages expected by 2020, will mean retailers will be hit harder than other businesses in the UK.
In turn, a number of retailers have been attempting to subvert the cost of the NWL by cutting benefits and extra pay. The petition started by an anonymous B&Q store manager against the company‘s cuts has gathered 127,000 signatures.
Not just employees are wary, either. A survey by FTI Consulting found that 47% of British adults would be less likely to buy from a retailer that did not pay the living wage.
Whilst this is good news for workers, smaller retailers including convenience stores may find it harder to adapt.
“The introduction of the National Living Wage will have a devastating impact on many of the 51,000 convenience stores in our sector,” said James Lowman, Chief Executive at the Association of Convenience Stores.
“Over 60% of stores in the sector will look to reduce the number of staff hours in their business and delay investment plans, while for some already operating on the edge of profitability it will mean that they will either stop employing staff or close their business altogether.”