The Scottish convenience sector, which employs over 55,000 people, faces significant challenges as many employees fall within the scope of the National Insurance (NI) and National Living Wage (NLW) changes.
The increase in NI contributions coupled with a 77p rise in the NLW, announced in the Autumn Budget, could add around £2,400 to the annual cost of employing a full-time worker, according to the Scottish Grocers’ Federation (SGF).
Such combined impact is expected to add tens of millions in additional expenses for retailers across the sector, which “most local retailers simply won’t be able to absorb”.
The SGF highlighted that businesses will either have to pass costs onto customers or “reduce annual pay rises for hard working and long serving staff”, despite the planned uplift in Employment Allowance relief from £5,000 to £10,500.
A recent survey conducted by the SGF found that 74% of retailers are now working more than 65hrs a week, just to keep staff costs down.
Luke McGarty head of policy & public affairs at the SGF said: “There is no doubt that local stores employing local staff will have to think twice before taking on anyone new or increasing staff hours. In some cases, it could be the final straw pushing retailers to reduce staff or even close the doors for good.
“We welcome the recognition of the additional support through the uplift in Employment Allowance, but for many that will only mitigate the damage. Small businesses and local shops are the lifeblood of the UK and Scottish Economies, providing a critical economic multiplier to boost local growth. Now is not the time to be penalising them for creating much needed local jobs.”
The Scottish Government will publish its budget on 4 December, and the SGF is calling on ministers to act cautiously on any proposals that could put small businesses under additional pressure.
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