Convenience retailers are bracing for financial strain as the government lays legislation confirming the new National Living Wage (NLW) and National Minimum Wage (NMW) rates.
While over 3 million workers in retail, hospitality, and other sectors are set to benefit from increased pay, retailers have warned of significant challenges ahead.
The legislation, laid before Parliament today (4 February), will see the NLW rise to £12.21 per hour for workers aged 21 and over, up from £11.44 from 1 April. Meanwhile, the NMW for 18- to 20-year-olds will increase by £1.40 to £10.00 per hour, representing a record boost for younger workers.
The government claims these changes will put approximately £1.8 billion into workers' pockets over the next six years, enhancing financial stability for millions of families and driving consumer spending.
“This government promised a genuine living wage for working people that will support people with the cost of living, creating a workforce that is fit and ready to help us deliver number one mission to growth the economy,” chancellor Rachel Reeves said.
“This pay boost for millions of workers is a significant step towards delivering on that promise.”
For retailers, however, the rising wage bill presents difficult decisions. Evidence submitted by the Association of Convenience Stores (ACS) to the Low Pay Commission last year highlighted the knock-on effects of past wage hikes. Over half (53%) of convenience retailers reported reducing investment in their businesses to cope with increased wage costs. Another 53 per cent had to raise prices in-store, while 47 per cent saw a direct hit to their profits.
The government insists that the wage increase is a step toward fairer pay structures and economic growth. It also marks the beginning of efforts to align the NMW for younger workers with the NLW.
Low Pay Commission chair Baroness Stroud said the increases recommended by them are a “big step” towards achieving a “genuine” living wage, though she has stated earlier that data already shows signs of employers finding it harder to adapt to minimum wage increases.
“It’s important we continue to assess the effects of these changes on employers and workers; to that end, the Low Pay Commission will be consulting with both groups in the coming months,” Baroness Stroud added.
The changes from April will mean:
- The National Living Wage for those aged 21 and over will rise from £11.44 per hour to £12.21 per hour.
- The National Minimum Wage for 18- to 20-year-olds rises from £8.60 to £10.00 per hour.
- The apprenticeship rate, and for 16- to 17-year-olds rises from £6.40 per hour to £7.55 per hour.
