The Word on Westminster

By Edward Woodall Association of Convenience Stores

AS WESTMINSTER BREAKS for the summer holidays, I’m sure Rishi Sunak will be thinking about what faces him and his party over the next year and what issues will be definitive in the general election One that im acts all businesses and will clearly feature in every party’s manifesto is em lo ment olic s ecificall the National Living Wage.

There is huge political consensus around this in the UK, and rightly so. Since George Osborne announced the ational Living Wage in 2015, it has had a big impact on low-paid workers’ pay packets. In April, the NLW rate was increased by 9.7% to £10.42. It is projected to reach £11.16 in 2024. This will also have a big impact on employers’ wage bills when all operating costs are rising.

This week, we gave evidence to the Low Pay Commission about the effect that NLW has on small retailers.

For a sector employing the majority of store colleagues at or just above the national living wage, it is clear increasing rates has a big impact. Many retailers have had to increase prices, reduce rofitabilit and reduce the number of hours or employees in their businesses. As the Low Pay Commission, Government and political parties look forward at how to set the NLW in future, we are asking them to consider the impact on businesses too.

It will be tempting for political parties to compete to commit to the highest possible rate in their manifestos, but this will likely hit many employers. It could result in the responses I have already referred to, but also undermine the secure, local and genuinel fle ible jobs our sector offers. For example, we could see the spread of more ‘gig economy’ employment models or a reduction in in-work progression for many people.

We have recommended that the Government and Low Pay Commission takes a cautious approach to setting future wage rates based on independent economic analysis – not politically set targets. We also want to see an ‘emergency brake’ mechanism introduced, and applied if the NLW rate is damaging entrepreneurship, forcing a move to gig economy work, or undermining in-work progression through eroded pay differentials.

The Low Pay Commission has a difficult ob to balance the needs both of employers and employees attempting to navigate a cost of living and trading crisis. They should be allowed to get on with doing that job, free from political interference