Business

New living wage will be a 'massive burden' for small businesses

Small retailers will be hit by new living wage, says NIIRTA
Gail Bell

THE introduction of a compulsory ‘living wage’ will have a "devastating impact" on independent retailers in Northern Ireland, it was claimed yesterday.

Glyn Roberts, chief executive of the Northern Ireland Independent Retail Trade Association (NIIRTA), was one of the most outspoken critics of the Chancellor's decision to introduce a new threshold, starting at £7.20 and rising to £9 per hour by 2020.

Presenting his first summer budget for the Conservative government, Mr Osborne said workers aged over 25 would be entitled to a "national living wage" from next April, to soften the impact of in-work benefit cuts.

The current minimum wage, which applies to those aged over 21, is £6.50.

However, Mr Roberts claimed the move would force retailers to reduce staff hours, work more hours in their business and cancel any future investment plans.

"To introduce this measure with no consultation undermines the independent Low Pay Commission and is a reckless way to impose a massive burden on small businesses," he said.

"NIIRTA has concerns that the proposed increase in the employment allowance to £3,000 - which is positive for independent retailers - is unlikely to fully off-set the increase in costs brought by the new over 25s national living wage rate."

Other Northern Ireland business leaders also expressed misgivings, with Wilfred Mitchell of the Federation of Small Businesses claiming the new, mandatory living wage would be "challenging" for many small businesses.

"Our research has revealed that two thirds of our members already pay the living wage or above, but there is real concern over the extent to which additional red tape and regulation will cut cut into a business's growth and time," he said.

Northern Ireland director of the Confederation of British Industry (CBI), Nigel Smyth, said while his organisation supported a "higher skilled, higher value, and higher wage economy", legislating for a living wage did not reflect businesses' ability to pay.

"The introduction of a national living wage of £7.20 next April - some seven per cent higher than the national minimum wage will be in October, will be a concern to many businesses and will impact on job creation," he said.

"Northern Ireland will be disproportionately impacted and this is taking a big gamble that the labour market can absorb year-on-year increases of an average of six per cent.”

NIPSA deputy general secretary, Alison Millar dismissed the announcement as a mere "re-branding" exercise, but the move was welcomed by Oxfam Ireland's chief executive, Jim Clarken, who described it as a "step forward" which would allow "people on the breadline to make ends meet".

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