A study by the University of Stirling and the Scottish Grocers’ Federation (SGF) has shown the true cost of rising staff costs on the convenience retail sector in Scotland as store owners are forced to reduce staff hours, cut staff or shut up shop altogether.
On 1st of April 2025, the UK National Living Wage increases to £12.21 per hour, a 6.7% increase on 2024/25. This is alongside employer’s National Insurance (NI) contributions swelling from 13.8% to 15%, while the threshold from which employer NI is charged falls from £9.1k to £5k.
The collaboration between SGF and University of Stirling has revealed that the true cost for retail employers will be as much as £16.72 per hour. This is a jump of £1.33 on the previous year. The study accounts for statutory costs, such as National Insurance and Holiday Pay, as well as additional employment expenses such as uniforms and administration costs.
Meanwhile, a recent survey of SGF members shows that more than 97% of respondents were less likely to hire more staff, due to the wage increases. Nine out of ten of owners/managers reported working over 55 hours per week, just to keep costs down.
If the current trend continues the NLW is on course to almost double within a decade (£7.20 in 2016 to £12.21 in 2025). As a result, additional staff costs will inevitably be passed onto customers, many of whom are also struggling to manage their household budgets, and stores will be open for fewer hours or will have to consider whether they can continue to trade.
Professor Leigh Sparks, University of Stirling, said: “The new Labour Government’s large increases to National Insurance for employers, together with the annual above inflation increase in the National Living Wage, both taking effect this April, affect smaller, consumer-facing businesses who employ considerable numbers of people, more than they do larger and more capital-intensive operations.
“The convenience store sector, vitally important for tying communities together and for local resilience and service, is particularly affected. Whilst the headline increase in the National Living Wage is 67p per hour, the real impact through directly associated costs and the National Insurance increase is double that at £1.33 per hour.
“This year’s increases follow probably the most turbulent period for decades in the costs of operating retail businesses and from which consumers and retailers are only just recovering. The convenience sector, providing as it does a vital, local, community function needs the real business cost of employment and the implications of its rapid rise on business operations to be better understood by governments.”
SGF Chief Executive, Dr Pete Cheema OBE, added: “Despite many retailers working longer and longer hours to keep staff costs down, the well above inflation increases to employment costs year on year means that some stores will need to cut staff hours yet again.
“There is no doubt that local stores employing local staff will have to think twice before taking on anyone new in the coming year. In the worst cases, it could be the final straw pushing retailers to reduce staff or even close the doors for good. We are already seeing retailers selling their stores and leaving the business.
“Small businesses and convenience stores are the lifeblood of communities, providing lifeline services, essential local jobs, and a boost for the local economy. It beggars’ belief that our governments, both desperate to promote economic stability and business investment, are doggedly adding to the cost of employment and crippling any potential growth.”
The True Cost of Employment 2025 paper will form part of SGF’s annual submission to the Low Pay Commission, for inclusion in its report and recommendations to the Prime Minister later this year.
