Independent retailers have raised concerns over the national minimum wage hike proposed by Labour leader Ed Miliband, saying the rise would be too high and not in line with “economic reality”.
Delivering his final party conference speech before the general election on Tuesday, Miliband vowed to up the minimum wage to £8 an hour over the next five years if he is elected as prime minister. Miliband said this would give low-paid workers a rise of £3,000 a year.
The proposal equates to a 3.5% increase per year over the next five years. Over the last four years the minimum wage has risen on average by 2.4% per year.
Bruce McLaren, owner of plus-size menswear independent Dalziel Kingsize in Woking, Surrey, said the increase could be a “major imposition” for the majority of independent retailers.
“We don’t want to increase costs further because trading isn’t great, it’s still hard work and all the utility bills are going up and pension costs will also be rising from 2017. We would like to see wages going up over the long term but not jumping up at that sort of rate. It just adds to the cost base when independents might eventually be coming out of a long recession.”
Jo Davies, owner of premium womenswear retailer Black White Denim in Wilmslow, Cheshire, agreed: “Moving to £8 is a big jump and the current economy doesn’t warrant it. We pay above the minimum wage, but the impact [of increasing it further] would be massive and our staff would lose out because of it. If the increase comes into play I would pay my hourly staff the same wages at the end of the month; they would just have to work fewer hours.”
Paul Hoggett, co-owner of J&B Menswear in Norwich, said £8 seemed “quite high” for minimum wage.
However, Sarah Decent, owner of two-store footwear independent Modish in Cambridge, said the increase would be manageable over a five-year period. “If the increase was going to happen next week I’d have to look at the books, but over five years I don’t think we’d be a million miles away from that anyway.”
British Independent Retailers Association deputy chief executive Michael Weedon said retailers’ ability to deal with the increase would depend on the “health of the individual businesses” and the support they receive from their local areas.
“If Labour helps ensure the health of our high streets, promoting good outcomes on consumer demand, footfall, parking, planning and property taxes then independents would be in a better position to pay the rising rate. If not the pressure to make the sums add up may well increase pressure on job numbers and hours worked. Labour needs to deal with the whole picture to get the outcomes it wants.”
Chris O’Dea, owner of menswear store OD’s in St Helens, agreed that more help was needed to rejuvenate the high street. “Business rates are the main bugbear in our town centre and it’s something we have no control over. Any reduction is a help but we need more help to stimulate the high street - in St Helens we’ve introduced free parking on Saturdays, for example. Local businesses need more support.”
Miliband has also proposed to cut business rates by 1% if he is elected. The Labour Party was unavailable for comment.