The Government has refused to reconsider hikes in the national living wage, ignoring small businesses’ concerns just days after pledging to “listen to small firms”.
James Lowman, ACS chief executive, wrote to business secretary Greg Clark on behalf of 21 trade associations, including the NFRN and Federation of Small Businesses.
The letter raised concerns about the targeted 60% of median earnings by 2020, which puts the projected living wage for four years’ time at more than £9 per hour.
“[We want them to] stop looking at targets and use a system where objective decisions can be made,” Lowman said. “Another priority is establishing a more formal way for our members to regularly engage with the Government about how the living wage is affecting their businesses.”
A spokesperson for the Department for Business, Energy & Industrial Strategy said it would stand by its wage plans.
A spokeswoman for Theresa May added: “The Prime Minister has been clear about building an economy that works for everyone, and making sure that people earn a decent wage for a day’s work is an important part of that.”
It’s important for the Government to pay attention to the experiences of the living wage introduction before they prescribe further increases that could drive many small businesses to close
The statements came days after the Prime Minister met with SME representatives to pledge her allegiance to small companies. “I want to build an economy that works for all, and that means listening to smaller firms,” she said.
A spokesman for the Federation of Small Businesses (FSB) added that the letter’s intention was not to see the living wage scrapped.
“The problem is around the mechanism used to calculate the wage,” he explained, adding that the wage should be set according to economic needs, not political policies.
Bart Dalla Mura, owner of Tysoe Village Stores (Costcutter) in Tysoe, Warwickshire, told Retail Express he’ll make cuts to balance increasing employment costs.
“I’m going to employ more multitaskers, and reduce the shifts I give to the less capable people,” he said. “I’ll also reduce the number of low-skilled people I employ.”
“The living wage needs to be kept in line with what businesses and companies can afford.”
However, David Charman of Spar Parkfoot in West Malling, Kent, said he supported the living wage hike. “Four years ago we started paying the living wage – a real one, not the Government’s one,” he told Retail Express. “The lowest wage we pay to an 18-year-old is £8.40 an hour.
He acknowledged that his location – the south east of England – made circumstances different for him and his employees, but added that “it feels right that the people working in our industry are properly rewarded”.
A survey of NFRN members found that 30% of store owners would reduce staff hours to cope with living wage costs; many would take on the extra hours and pay themselves below the minimum wage.
NFRN chief executive Paul Baxter said: “It’s important for the Government to pay attention to the experiences of the living wage introduction before they prescribe further increases that could drive many small businesses to close.”
Meanwhile, Labour leadership competitor Owen Smith has outlined his own “radical” plan for the living wage.
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