Rising business costs triggered by the double whammy of increases to national insurance contributions (NICs) and the minimum wage will see over half (52%) of independent retailers cut back their workforce, while two thirds (67) will cut back on staff hours, according to a survey by the Federation of Independent Retailers (the Fed).
Eight in ten members said they would be forced to work more hours themselves, while four in 10 respondents said they would raise prices to combat the increasing costs. The same number said that they could not raise prices, mainly because so many of the products that they sold were price marked.
The survey results were released on the eve of increases of 6.7 per cent to the national minimum wage, taking it to £12.21 per hour. From April 6, Employers’ National Insurance Contributions (NIC) will increase from 13.8 per cent to 15 per cent, while the threshold – the point at which employers begin to pay NI on an individual’s salary – will be reduced from £9,100 to £5,000.
The cost increases have also torpedoed many retailers’ growth plans. Only 21 per cent of those surveyed said they would be investing in or refitting their businesses, while just four per cent said they had plans to introduce technology, such as self-service tills.
The Fed’s National President Mo Razzaq said: “Small independent retailers are the backbone of their communities. providing employment and creating jobs. As responsible employers, we want to ensure we are paying a fair wage to our staff. But a bigger than expected rise to the national living wage to £12.21 an hour from April 2025 is a step too far for hard-pressed small businesses.
“As well as paying our staff more in wages, we must pay more in national insurance and pension costs, at a time when many of our other costs, including energy costs, are rising.
“There is no easy way for small retailers to combat these increases. As our survey shows, the only solution available to independent shop owners is to reduce staff hours and staff numbers and, somehow, take on even more hours ourselves.”
