An increase in the minimum wage, which kicks in on Saturday, will hold back investment by the retail sector that employs a considerable proportion of the 900,000 people who will receive a 2.5% pay rise.
The Association of Convenience Stores, which represents over 600 stores that employ almost 9,000 people across the UK, says that small shopkeepers cannot afford wage hikes at a time of huge challenges on the high street.
“Unaffordable increases in the minimum wage are holding retailers back from making the investments necessary to grow their businesses,” said ACS chief executive James Lowman as he announced the results of survey of his members this month.
The survey revealed that 80% of ACS members had cut back on staff hours this year, and 81% believe increases to the minimum wage have made their business less competitive compared to 2010.
However, the Trades Union Congress (TUC) believes that this week’s rise, which takes the adult hourly rate above the £6 barrier for the first time, will be good for the overall economy. The organisation estimates it will benefit the public finances by £230 million as tax and national insurance rates increase and the benefits bill falls.
"This rise will put extra cash in the pockets of the UK’s lowest-paid workers when they can ill afford to have their pay squeezed by inflation,” said TUC general secretary Brendan Barber.
"The minimum wage has already helped hundreds of thousands of families without causing significant job losses and its success has shown that despite much scare-mongering from some employers, sensible labour market regulation is good for business," he added.
The adult minimum wage jumps by 15p to £6.08 from Saturday, by 6p to £4.98 for 18 to 20-year-olds, and up by 4p to £3.68 for 16 and 17-year-olds, while the apprentice rate goes up by 10p to £2.60.
Unions are pressing the Low Pay Commission to be "bolder" in recommending next year’s rise, with some leaders believing a "living wage" of more than £8 an hour is needed.