Don’t set minimum wage too high

James Lowman, ACS chief executive, told the Low Pay Commission (LPC) at an evidence session last week that further increases could threaten the staff levels and even existence of some businesses.

He argued that future NLW increases could cause problems with the labour market in a state of flux due to the furlough scheme, EU exit, Covid testing, isolation and other factors.

The LPC’s policy is for the NLW to reach two-thirds of median earnings by 2024 – currently projected to be £10.33.

Lowman’s arguments were partly based on findings from the

ACS’ National Living Wage Survey 2021, which showed that:

• Convenience retailers have primarily responded to the £8.91 NLW rate by; taking lower profits (68%), increasing prices (48%) and automating certain processes (44%)
• Almost two thirds of convenience retailers (58%) believe that the planned increase to the NLW to £10.33 in 2024, would impact their business investment plans and could have a negative impact on the number of employees in their business (63%)

Lowman added: “Convenience stores provide local, flexible and secure employment to hundreds of thousands of people across the UK but these are extraordinary times for the labour market, with existential challenges facing many businesses employing at or close to statutory minimums.

“Our evidence suggests that the Low Pay Commission should take a measured and cautious approach when setting wage rates for next year to allow businesses and the wider economy time to recover.

“This means caution now, then waiting to see how the labour market adjusts and whether the timeframe for statutory wage rates to reach two thirds of median earnings beyond 2024 remains the right approach.”

The ACS’ evidence session followed a roundtable with the LPC last month (June) which enabled retailers to share their experiences directly with commissioners.

The ACS’ written submission is available here: acs.org.uk/lobbying/lpc-low-pay-commission-2021.