Minimum Wage has done its job and needs a root and branch rethink, says bira

Minimum wage freeze needed in 2012 says bira

Compelling new evidence from retailer data makes it clear that the Low Pay Commission should be looking to a freeze in the National Minimum Wage (NMW) for the 2012 round.

Giving evidence in the current round of consultations, CEO Alan Hawkins used the results of the bira wages survey carried out in July and August.

This showed that:

• 61% of members have not been able to give a pay rise this year at any grade
• Where rises were given (39%) the average increase was 2.5%, but 28% of employers also reduced hours for some staff and 10% made redundancies.
• Some 67% stated that the NMW had affected profits, up from 43% in the 2010 survey, with members in the 3-10 million annual turnover bracket the most affected and with a geographical spread that particularly affected East Anglia and the North.
• 42% stated that they were having to reduce the number of people employed as a result of the NMW (up from 39%). Reductions in staff hours have commonly been used to mitigate the effects of this.
• The average difference between the NMW and the base rates for normal retail employment had fallen to 11p per hour in department stores and 10p in book, toy and music stores which have been particularly badly hit by the recession.

The NMW should be seen against the background of falling retail sales and rising shop vacancy rates, with one in seven town centre shops now empty. The government’s growth agenda sees Retail as one of six key areas which can drive growth in the economy: bira argues that on the basis of this evidence the NMW is working against the job creation potential of the sector. More importantly, as the NMW has caught up with standard pay rates, any incentive to employ younger staff is weakened as more experienced staff simply represent better and better value at increasingly similar pay rates.

It also reminds regulators that with the new 3% contributory pension arrangements being phased in from 2012 and affecting all employers by 2014 the strains on employment driven by costs are inevitably going to increase.

Alan Hawkins concluded: “The national minimum wage has run its course. It does not work in the same way across the regions. It does not provide a backstop to protect workers in the worst paid trades and the worst paid areas. It is costing jobs at a time when jobs are desperately needed. At the very least there must be a freeze in increases.  We believe the whole regime needs a root and branch rethink.”

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