Employer costs weigh heavily on retailers, says SGF
THE Scottish Grocers’ Federation (SGF) has highlighted how much the hike in national living wage will impact on retailers’ businesses as the 50p increase is introduced – claiming the real cost is far more.
As of 1 April, the UK national living wage (NLW) has increased to £12.71 per hour, representing a 50p rise on 2025.
However, a new study from the SGF in collaboration with the University of Stirling has revealed that the true cost to retailers when paying the NLW is significantly higher.
According to the industry body, store owners who pay their staff the NLW will actually shell out £17.37 per member of staff per hour, an increase of 65p from the previous year.
Professor Leigh Sparks from the University of Stirling said: “A reduction in the number of people employed by the convenience store sector in Scotland as well as indications of reductions in labour input (hours worked) and hours of opening have recently been seen in national data.
“While the increase in the NLW is a recent low, and there have been no further increases in employer National Insurance, 15 years of austerity, the true cost of Brexit and recent, and likely future Trump-inspired, economic turbulence and inflation have made the Scottish convenience store sector cautious and concerned over costs and regulations.”
The SGF has said the new study has factored in elements such as employer National Insurance contributions and holiday pay, alongside additional employment-related expenses such as uniforms and administrative overheads.
As a result of this, the SGF has found that 77% of their retailer members have said that these wage increases will have a significant or great deal of impact on the viability of their business.
On top of this, all respondents to the survey agreed that they are now less likely to hire new staff due to wage rises.
Over the past decade, the real cost of employment has almost doubled, says the SGF, rising from £9.28 per staff member per hour to £17.37 in 2026. As a result, retailers are now warning that higher staffing costs will inevitably be passed on to customers, many of whom are already facing financial pressures elsewhere and depend on these local stores.
Pete Cheema, chief executive at the SGF, said: “For a decade, we’ve exposed the gap between the headline National Living Wage and the real cost of employing staff – and that gap is only widening.
“Let’s be clear, Scottish retailers support fair pay, but policymakers cannot ignore the real and rising business costs created by above-inflation increases to the NLW. Last year, retailers were hit with a double whammy – sharp wage rises combined with damaging increases to employer National Insurance costs.
“Instead of easing the pressure, governments have chosen to further add to the burden on retailers. The implications of this puts jobs, investment and the future of local businesses at risk.
“If governments are serious about promoting economic stability, supporting business investment and tackling increasing levels of unemployment, they must address the continued rise in employment costs and the impact this is having on small business growth.”
