Overwhelming numbers of senior wholesalers say the National Minimum Wage (NMW) should be frozen, according to a Wholesale News reader survey this month.
Nearly 70% of respondents (66.7%), many of them senior industry figures, want to see a halt to further increases compared to the 33% who think any future rises should be linked to inflation.
The survey of more than 500 Wholesale News readers follows a submission by the Federation of Wholesale Distributors (FWD) last month to the Low Pay Commission (LPC) calling for the minimum wage to remain level to prevent wage inflation.
In its submission to the LPC’s consultation, now ended, the Federation said the NMW had risen at a level significantly above inflation in recent years, adding to its members’ cost base at a time of economic stagnation, with no real prospect of sustained economic growth. This would impact on the wholesale sector’s ability to both create and sustain employment, it said.
Calling for the freeze from October next year, the FWD’s submission said: “Employment costs are among the highest costs faced by our members, who are large-scale employers throughout the country, employing more than 70,000 people directly and supporting employment for many hundreds of thousands of people in associated industries.
“With previous increases, employers have tried to apply the same percentage rises to all employees, but this is now too costly for many companies. At a time when some employers have to impose a wage freeze it cannot be equitable for some staff to receive a wage increase of 1.8% through the NMW while others receive nothing.”
The survey revealed that 50% of respondents thought any rise in the minimum wage would put a halt on plans to employ more staff, while just under 20% (18.8%) said it would mean they’d have to lay off people. Just below 40% (37.7%) said they would delay investment in their business if wage costs rose further. The survey also highlighted that wholesalers now feel somewhat under siege to a combination of rising wage costs and increased employee statutory benefits with 44% labelling the NMW as the biggest burden to their Features > Business, but 56% claiming holiday, sick and maternity pay was the more onerous.
FWD chief executive James Bielby said: “Our members support the minimum wage but annual increases affect the whole pay structure, not just those earning the NMW. As profit margins are currently static at best, and costs continue to rise, the NMW has significantly eroded the relative rate of pay our members are able to offer.
“Further rises above the rate of inflation would force wholesalers to either cut back on hours and staff or increase prices, which would have knock-on impacts on the thousands of retailers, caterers and SMEs they serve. While it’s important that workers receive a fair wage for their labour, it’s also important that companies like our wholesale members and their SME customers are able to offer the employment that allows them to earn that wage.”
However, the survey also revealed it’s not all doom and gloom with 40% of respondents saying they plan to hire new staff in the next 10 to 12 months.
Wholesalers have their say
- “NMW should be the safety net originally intended, not the totem it has now become.”
- “NMW is a complete burden on business – no one else is getting any pay rises!”
- “Since its introduction in 1999 the minimum wage has increased by 172%. That is an average of 14.3% per annum – and the Government thinks this is appropriate?”
- “Statutory benefits go up in proportion to the minimum wage. I used to employ 45 people across my businesses. Five of those were purely to cover holiday entitlement.”
- “Holiday pay at 28 days is a major increase in costs to our business – approximately 12%. Employment law is now a major drawback to future plans.”
- “We are constantly on the lookout for ways of mechanising our work and reducing the workforce. Increasing the minimum wage merely accelerates our investment in machinery and reduces our workforce.”