Minimum wage to jump 3%

Cable accepts Commission recommendation

SCOTLAND’S retailers are likely to see wage costs rise in the autumn after business secretary Vince Cable last month accepted a recommendation from the Low Pay Commission that there should be a 3% increase in the national minimum wage. It means that the current rate for workers over the age of 21 will rise 19p an hour to £6.50 in October.
However the Commission’s recommendation had been for a lower increase than many politicians including Cable himself and Coalition Government chancellor George Osborne had appeared to suggest in recent statements. Osborne had signalled that he wished NMW to return to the purchasing power it had held before the recession, which would have seen it increase to £7 by next year.
But Scottish convenience retailers contacted by SG have said 3% rise could still be difficult to deal with, particularly as it will also raise wage expectations of those who are currently paid more than the minimum.

Business secretary Vince Cable agreed 3%. Picture: Duncan Phillips CASS
Business secretary Vince Cable agreed 3%. Picture: Duncan Phillips CASS

Leslie Kilminster, owner of Premier Hutcheon Street, Aberdeen, said: “Yes, it’ll affect my business and it will affect the margins slightly, but if your staff are hard working then they deserve the pay rise.
“The real concern is that if this were to go higher and fall in line with what George Osborne was looking for next year. A further rise in the national minimum wage is only going to force companies to have even more cuts.
“It’s the small guys who will get hit really hard. There are some shops in Scotland in particular that are not doing very well at the moment, an increase like this might go so far as to booting them out of business.
“I could see a lot of shopkeepers working from morning ‘til night themselves because they can’t afford to get staff in to help.”
Isla Craig, owner of Crianlarich Store in Perthshire, said: “We pay above minimum wage here, but we’ll have to increase our wages greater than inflation in order to keep in step with this raise.
“It’s yet another overhead for us, and although I don’t think we’ll have to cut staff we certainly wouldn’t be able to increase staff hours which we are looking to do.
“To keep good staff we’ve made the decision to pay a bit more, but how long we can keep that decision going depends how much the minimum wage increases.”
John Lee, public affairs manager for the Scottish Grocers’ Federation, said: “Despite the recovery the retail climate in Scotland is still very challenging – in February sales were down by 1% and footfall dropped by more than 4%. This above inflation rise in the NMW was not what we needed from Westminster.
“We would urge retailers to make sure they use the new Employment Allowance, which can save up to £2,000 in Employers NI contributions.”