The eye watering increases to employer National Insurance contributions (NIC) announced in the UK Budget, in addition to the National Living Wage (NLW) rise, could cost Scotland’s local retailers tens of millions that they can ill afford, the Scottish Grocers’ Federation (SGF) has stated.
Convenience staff across Scotland worked almost 500 million hours last year, highlighted SGF, which has calculated that the changes could add around £2,400 to the cost of employing a full-time member of staff in 2025/26.
What’s more, of the 55,000+ people employed across the Scottish convenience sector, nearly a third of staff work between 17-30hr/wk (18% less than 17hrs/wk). This means that thousands more c-store employees will require employer NI contributions. Combined with the 77p increase to the NLW, the extra costs could run into tens of millions, even taking into account the planned uplift in Employment Allowance relief from £5,000 to £10,500, said SGF.
A recent survey conducted by the trade body for its annual True Cost of Employment Report, shows that 74% of retailers are now working more than 65hrs/wk, just to keep staff costs down.
Head of Policy & Public Affairs, Luke McGarty, said: “Despite many retailers working longer and longer hours to keep staff costs down and many stores struggling to keep the lights on. Together with a plethora of new regulation directed at small local businesses, higher employment costs could now result in the Scottish sector paying tens of millions in additional outgoings.
“There is no doubt that local stores employing local staff will have to think twice before taking on anyone new or increasing staff hours. In some cases, it could be the final straw pushing retailers to reduce staff or even close the doors for good.
“Most local retailers simply won’t be able to absorb the extra cost and will either have to pass them onto customers, or reduce annual pay rises for hard working and long serving staff.
“We welcome the recognition of the additional support through the uplift in Employment Allowance, but for many that will only mitigate the damage.
“Small businesses and local shops are the lifeblood of the UK and Scottish Economies, providing a critical economic multiplier to boost local growth. Now is not the time to be penalising them for creating much needed local jobs.”
The Scottish Government will publish its budget on 4th December, and SGF is calling on ministers to act cautiously on any proposals that could put small businesses under additional pressure.
