Plans to increase the national minimum wage by 3% and apprentices' pay by 20% from October this year are likely to cost retailers hundreds of millions.
The Government announced today that the minimum wage would increase to £6.70 per hour from 1st October – the biggest rise since 2008 – while apprentices' pay will go up 57p an hour to £3.30.
Prime Minister David Cameron said the changes, which will affect an estimated 1.4m workers in the UK, “will mean more financial security for Britain's families and a better future for our country”.
However, John Walding from the Forum of Private Business said there were concerns that the pay increases could “lead to problems”, particularly for the group's retail members.
“The biggest single cost for our members last year was staff costs as businesses prepare for the added cost of pensions auto-enrolment and look to retain staff as the economy grows,” he said.
“Without support to counterbalance this increase it may deter many small retailers to invest in training and recruitment.”
British Retail Consortium director general Helen Dickinson said the trade association had “some concerns” about the Government's approach to the apprenticeship rate, which was the largest ever rise in the National Minimum Wage for apprentices.
“The retail industry employs almost 20% of the UK’s apprentices and while our research shows that use of the apprenticeship rate is not widespread in the retail industry, the low pay commission’s independence and recommendations are as important to workers as they are to business,” Dickinson said.