The new minimum wage, known as ‘The National Living Wage’ was introduced on the 1st April this year with the hourly rate for workers aged 25 and over being raised from &6.70 to &7.20. That represents &910 more a year for full-time employees.
The retail industry is one of the largest employers in the UK and employs nearly three million people in the UK. In fact, retailers will need to find up to &3bn more a year to pay staff by 2020, according to the British Retail Consortium.
These higher labour costs could lead to cuts in staff numbers, hours or stores, price rises and the adoption of new technology such as self-service machines.
In an attempt to protect margins, retailers may bypass the reputational issues the changes might create. They may put workers onto flexible contracts while changing benefits packages, cutting bonuses, overtime schemes and other perks.
But ultimately, employers will have to improve their productivity – or what is produced per worker per hour worked. As well as automation, this could mean better management and more training. Some employers that already pay the voluntary living wage have reported that higher pay itself has led to higher productivity thanks to better-motivated and more loyal staff.
A reduction in hours and jobs may bring other minimum rights and standards to employees’ attention, leading to an increased number of claims for work-related accidents or ill health. Equally, disputes regarding hours, processes or jobs might become more common which leaves employers at greater risk of exposure to employment tribunal claims.