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Jobs under pressure over minimum wage rise

Monday 11th April 2011
The increase of 2.5% in the National Minimum Wage announced last week is a substantial rise which adds to the pressure on retailers as they try to grow their businesses and create jobs, the British Retail Consortium has warned.

The change will come into effect in October. It takes the adult minimum wage up from £5.93 per hour to £6.08. Combined with slowing sales, poor consumer confidence and rising costs it will be a further obstacle to the retail sector as it tries to play its role in the country's economic recovery.

Most shopworkers earn above the minimum wage but retail is a labour-intensive sector. It has thin profit margins which are particularly affected by increased costs of all kinds.

The BRC said it supported the principle of the minimum wage as a basic floor for decent pay but it was important it reflected economic realities. Employers get just six months notice of the change, which is difficult to budget for. More notice of future National Minimum Wage decisions is needed.

Director General of the British Retail Consortium, Stephen Robertson, said: "At a time when the priority should be getting more people into work, any increase in staff costs is an extra hurdle. This rise in the National Minimum Wage is at the very top end of what retailers could be expected to live with.

"Employers have just been hit by an increase in National Insurance. Business rates have soared and retailers are still absorbing much of the increase in VAT. This increase in the minimum wage is yet another challenge to retailers when trading is already difficult on the high street.

"A third of retail staff are under 25. Young people are facing some of the biggest challenges on the jobs market at the moment, and this increase makes it harder for retailers to expand and create the jobs needed.

"In the current climate it is the private sector which is driving the economic growth that will provide the jobs and tax revenues of the future. The minimum wage must reflect the economic realities businesses are dealing with."

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Mike Jones

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