Pete Cheema

Research, published today (1 April) by the University of Stirling and the Scottish Grocers’ Federation (SGF), has shed light on the impact of the rising staff costs on the convenience retail sector in Scotland.

The UK national living wage (NLW) increases to £12.21 per hour today - a 6.7% increase. This is alongside employer’s National Insurance (NI) contributions swelling from 13.8% to 15%, while the threshold from which employer NI is charged falls from £9.1k to £5k.

The university research has revealed the true cost for retail employers will be as much as £16.72 per hour - a jump of £1.33 on the previous year. The study accounts for statutory costs, such as NI and holiday pay, as well as additional employment expenses such as uniforms and admin costs.

Meanwhile, a recent survey of SGF members shows that more than 97% were less likely to hire more staff, due to the wage increases. Nine out of ten of owners and/or managers reported working over 55 hours per week just to keep costs down.

If this trend continues, the NLW is on course to almost double within a decade (£7.20 in 2016 to £12.21 in 2025). As a result, additional staff costs will inevitably be passed to customers, many of whom are also struggling to manage their household budgets, and stores will be open for fewer hours or will have to consider whether they can continue to trade.

SGF chief executive, Dr Pete Cheema OBE (pictured), saidd: “Despite many retailers working longer and longer hours to keep staff costs down, the well above inflation increases to employment costs year on year means that some stores will need to cut staff hours yet again.

“Stores employing local staff will have to think twice before taking on anyone new in the coming year.”

“There’s no doubt that local stores employing local staff will have to think twice before taking on anyone new in the coming year. In the worst cases, it could be the final straw pushing retailers to reduce staff or even close the doors for good. We are already seeing retailers selling their stores and leaving the business.

“Small businesses and convenience stores are the lifeblood of communities, providing lifeline services, essential local jobs, and a boost for the local economy. It beggars’ belief that our governments, both desperate to promote economic stability and business investment, are doggedly adding to the cost of employment and crippling any potential growth.”

Professor Leigh Sparks, from the University of Stirling, added: “The new Labour Government’s large increases to NI, together with the annual above inflation increase in the NLW, both taking effect this April, affect smaller, consumer-facing businesses who employ considerable numbers of people, more than they do larger and more capital-intensive operations.

“The convenience store sector - vitally important for tying communities together and for local resilience and service - is particularly affected. Whilst the headline increase in the NLW is 67p per hour, the real impact through directly associated costs and the NI increase is double that, at £1.33 per hour.

“This year’s increases follow probably the most turbulent period for decades in the costs of operating retail businesses and from which consumers and retailers are only just recovering. The convenience sector needs the real business cost of employment and the implications of its rapid rise on business operations to be better understood by governments.”

The True Cost of Employment 2025 paper will form part of SGF’s annual submission to the Low Pay Commission, for inclusion in its report and recommendations to the Prime Minister later this year.

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