Concerns grow over rising staff costs

Retailers have voiced concerns about their long-term sustainability given next year’s anticipated rise to the National Living Wage (NLW), the phased introduction of staff pensions, and continued uncertainty over future implications of Brexit on small businesses.

Mike Dorey, owner of Eastcombe Londis, Gloucestershire, said: “In isolation, the NLW is a good thing; good staff should be rewarded with a good wage. However, when you couple that with the pension burdens next year, everything becomes really tight.

“It’s almost impossible for us to reduce costs further; we can’t run the store with any fewer staff and we’ve already invested in energy efficiency - and we can’t raise prices. We are feeling the squeeze from competition including discounters and online retailers.”

John Mitchell, owner of two Spar stores in Ceres, Fife, said: “I’m not sure how some businesses are going to cope. The NLW has added £15,000 to our wage bill across our stores and automatic pension enrolment has added £900, but we have been lucky as we are doing well, with profit margin up 24%.

“One of my biggest concerns, though, is Scottish independence as a result of Brexit. I believe that Scotland will get another referendum and vote to become independent and join the EU and the Euro, which will have a massive effect on all Scottish retailers.”

The Association of Convenience Stores (ACS) recently joined 18 other trade associations representing more than 388,000 businesses in writing to the new business secretary Greg Clark urging caution over planned NLW increases over the next four years.

James Lowman, ACS chief executive, said: “The Low Pay Commission should regain its powers to recommend all minimum pay rates based on economic circumstances and the needs of both employers and employees, instead of having to work to targets set by politicians.”