National minimum wage rise could prevent retailers employing new staff

Retailers will find it “very difficult” to employ new staff and may be put off hiring altogether as the national minimum wage (NMW) rises again today (1 October), an industry body has warned.

A British Retail Consortium (BRC) report out today has revealed the rate of increase of the NMW has caused severe job cuts in the retail industry and is “seriously slowing” the rate of job creation.

Last year’s NMW rise to £5.35 – 13% more than predicted – cost the retail industry more than £1.7bn, forcing shop owners to axe jobs or open new stores with fewer staff per square foot of selling space, said the BRC.

As the NMW rises again to £5.52 today (1 October), a BRC spokesman told Personnel Today: “Retailers are quite relieved that this year’s increase is more or less in line with inflation, but as it currently stands they have no idea what figure will hit them next year and won’t know until March 2008 – leaving only six months to plan for it.

“It will be very difficult to plan for job creation and, given that uncertainty, retailers are likely to hold off creating new jobs until the position is clearer – they tend to freeze recruitment.”

The BRC said the effects of NMW increase are “particularly dramatic” for smaller retailers, who are spending 25% of turnover on wages compared with 17% a year ago.

The rate of increase of NMW has gone up 46% since 1999, “well above inflation and increase in average earnings,” said the BRC.

The retailers’ association is calling for the government to give more indication as to what rises will take place in future so shop owners can plan staffing better.

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