The British Retail Consortium (BRC) has called for a ‘fundamental review’ of the ultimate goal of the National Minimum Wage (NMW).
In its submission to the Low Pay Commission, the BRC said an increase to £5.35 in October 2006, could lead to about 35,000 jobs being lost and could create an additional cost of £1.13bn to the retail sector.
In a recent BRC survey on the impact of the NMW, submitted to the commission in evidence, 11% of the retailers surveyed said they would consider job cuts if the proposed 6% increase to £5.35 goes ahead in October 2006. The survey also revealed that the rise to £5.05 has already cost retailers £1.21bn.
BRC director-general, Kevin Hawkins, said: “At its current level the NMW is now having a serious impact on retailers of all sizes. Most retailers have been cutting their prices and given the outlook for consumer spending, expect to continue doing so.
“They simply cannot go on absorbing further increases in their fixed costs – of which labour is one of the biggest,” he said.
The TUC hit back, insisting that there is no economic case for not going ahead with the proposed increases, with economic growth continuing and inflation still low.
TUC general secretary, Brendan Barber, said: “Millions of low-paid workers are reliant on the minimum wage rising realistically every year.
“If employer lobbyists get their way and the minimum wage increases at a slower rate or is frozen, it is these people and their families who will suffer.”