Trade has serious worries over potentially 'unsustainable' minimum wage rise
Last week, Osborne said if the minimum wage had kept pace with inflation, it would be £7 per hour by 2015/2016. The current adult rate is £6.31 per hour.
Kate Nicholls, strategic affairs director at the Association of Licensed Multiple Retailers (ALMR), said the economy “needs to be careful” that it does not introduce an “unsustainable increase that impacts on jobs”.
“That’s why we have the Low Pay Commission (LPC) making an assessment, looking at what is sustainable for the economy and what the impact is on job creation and job numbers,” she said. “We need to let the LPC do its job.”
'Single biggest expense'
The ALMR sent a submission to the LPC as part of the consultation on the minimum wage in November 2013, in which it stressed that the industry can “ill afford” rises in labour costs. It highlighted that the single biggest expense is payroll and gross employment costs, which accounts for over a quarter of an average pub’s turnover.
In response to Osborne’s statements, the British Beer & Pub Association added: “Rising costs present challenges for a very highly taxed sector such as ours. This should be taken into account, as we need to ensure we are protecting jobs in pubs, especially for young people.”
'We'd struggle to be competitive'
Mitch Adams, licensee at the Thatchers Arms in Mount Bures, Essex, said an increase in the minimum wage would “completely undo” the recent national insurance break for small businesses.
“[Osborne] is misled if he thinks businesses can afford £7 as a minimum wage. We’d struggle to be competitive as an industry and be in danger of employing fewer staff.”
'In jeopardy'
Alan Vaughan, of the Countryman Inn in Shipley, West Sussex, added that an increase would “certainly put a lot of pubs in jeopardy”.
Janet Dooner, of the Railway Tavern in Stratford, east London, said she already pays £7 per hour as a minimum, but if she had to pay more she would be forced to get rid of staff. “It would absolutely cripple me,” she said.
