MINIMUM WAGE INCREASE BROADLY SATISFACTORY

5 March 2008

The 21 pence increase in the National Minimum Wage (NMW), announced today (Wednesday), disappointed retailers who had hoped for an increase in line with inflation. However, this increase is more moderate than previous rises.

The British Retail Consortium (BRC), which supports the principles behind the NMW, had called for this year’s rise to be no more than the rate of inflation.  It said that although the four per cent increase announced today indicates the Low Pay Commission (LPC) is now looking at genuine economic evidence, BRC research shows retailers needed a real terms freeze.

Reacting to today's news Stephen Robertson, the BRC’s Director General, said:

"It seems that the Low Pay Commission have listened to our evidence about the slowdown in sales, increasing staff costs and an erosion of bonuses and overtime. Shop prices have been held well below inflation, despite the increase in costs faced by retailers. So why wasn't the latest minimum wage increase capped at the same level? There should also be no repeats of the previous inflation busting increases, as businesses are still coming to terms with the cumulative effects of these.

"Let’s not forget that retailers create over 10 per cent of UK employment. They also lead the way on apprenticeships and training, and are at the heart of the Government’s drive to help difficult to employ people back into work. But they have a finite pot for staff costs so substantial wage increases come at the cost of training, bonuses and other benefits."

Stephen Robertson added:

"Retailers had to cope with a £2.7 billion hike in wage bills caused by the 2005 and 2006 above-inflation minimum wage increases. We are facing very difficult trading conditions, while energy prices, rents, rates, and service charges are all on the increase.

"We need an end to the annual uncertainty on minimum wage rates. There should be a real-terms freeze while the Low Pay Commission reviews future direction.  We will continue to contribute constructive and practical ideas to ensure the minimum wage is sustainable for the future."