UK retailers are likely to hike up prices or cut jobs to offset the cost of the new living wage announced in the budget, credit agency Moody’s has warned.
The current minimum wage for over 25 year olds is to rise from £6.50 per hour to £7.20 from April 2016 and to £9 by 2020.
Moody’s calculated a retailer employing 50,000 full-time staff at £7 per hour will have to pay an extra £21m a year to get to £7.20.
Maria Maslovsky, senior analyst at Moody’s, said the credit rating agency “expects retailers to pass on higher labour costs to customers” and also warned that retailers could reduce employee benefits such as staff discounters because they offer “room for manoeuvre”.
The boss of one womenswear high street multiple told Drapers: “For those employing more than 20,000 people, there will be a huge cost. Having said that, if this topples your business you are obviously not selling enough or you’re not treating your staff well enough.”