2025 will see the national living wage reassessed, with the UK’s new government now turning its attention to how this might impact the nation.
While the current cost of living and broader economy will obviously feature at the heart of any decisions, there are other factors which must be taken into consideration before anything is finalised - and naturally retail will feature heavily.
The update states that any changes should “take into account the impact on business, competitiveness, the labour market, the wider economy and the cost of living, including the expected annual trends in inflation between now and March 2026. The Low Pay Commission should ensure that the rate does not drop below two-thirds of UK median earnings for workers aged 21 and over, a recognised measure of low hourly pay.”
In addition, the remit advises it will remove discriminatory age bands for adults and asks that the Commission “recommends a National Minimum Wage rate that should apply to 18–20-year-olds from April 2025,” with the hope that this will act as a step towards a single rate of minimum wage. “This ambition should be pursued while also taking into account the effects on employment of younger workers, incentives for them to remain in training or education and the wider economy,” it adds.
The Low Pay Commission is asked to provide a final report in response to this remit to the Prime Minister and the Secretary of State for Business and Trade by the end of October 2024.
The Association of Convenience Stores (ACS), in reaction to the new remit, reports there are numerous pressures on retailers that must be considered in regard to these developments. It highlights a wider reduction in investment in businesses, the rise in prices, a reduction of staff hours in general and the broader squeeze on profits.
ACS chief executive, James Lowman, said: “It’s essential the Commission considers the impact of rising wage rates on both sides of the labour market, so we’re encouraged by the inclusion of business impact within the remit this year. Our members are already telling us that wage rates are having a negative impact on investment, which will make it harder to trade, diversify and remain competitive in future. Further increases beyond the two-thirds of median earnings threshold will only intensify the problems facing retailers and stifle wider economic growth.”
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