UK retailers have called for changes in how the minimum wage for workers is determined, with new figures expected to reveal that last year’s increase cost retailers GBP1.7bn (US$3.5bn) – or 13% more than forecast.
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The British Retail Consortium (BRC) called for future rises to be guided by median earnings in sectors most affected by the minimum wage, such as retail.
The BRC, which represents the country’s major retailers, said the impact of last year’s 6% increase was felt “well beyond simply the cost of pay rises” for those on the minimum wage.
The consortium said that retailers’ efforts to maintain differentials for those higher up the pay hierarchy, at a time of higher than expected inflation, had added GBP200m to the GBP1.5bn in costs that had been budgeted for.
BRC director general Kevin Hawkins said: “Past minimum wage increases have appeared to emerge from an attempt to balance competing bids from business and unions rather than being genuinely based on economics.”
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By GlobalDataHawkins added: “Future increases should be guided much more closely by increases in median earnings in sectors, including retail, which are most affected by the minimum wage. If that had happened last year retailers would have faced a lower, more predictable increase rather than seeing a further GBP200m wage bill pop up from nowhere.”
In addition to referring to median earnings growth in the most affected sectors, the BRC is calling for the LPC to be guided by the proportion of workers in each sector receiving NMW, and productivity (gross value added) per person.
The rate of the increase in the minimum wage, up 46% since 1999, is now seriously slowing the rate of retail job creation, the BRC said.
