Tesco has earned themselves some valuable PR by coming out today (10/7) in support of the government’s new National Living Wage (NLW). This effectively will mean a new minimum of £7.20 for the over 25’s. It was a brave act, and it is no surprise that the rest of the retail sector has been rather muted despite the huge impact this will have on their margins.
Whilst the government have compensated companies by reducing corporation tax by 1% to 19%, but will not happen until 2017 and the increase in wage rates will be implemented next year. The CBI, have said that the corporation tax reduction would NOT be enough to offset the increase in NLW. The Office of Budget Responsibility have predicted a loss of 60k jobs nationwide.
The big question is how will retailers react? With the prevalence of much maligned zero hour contracts, staff may find their hours reduced, also there is now a much greater incentive to employ younger people!
The retail sector has struggled to present itself as a career of choice, recent exposes on zero hour practices have led the public to see jobs as low pay and unskilled, reminding me of the phrase “Mcjob” describing McDonalds. Major retailers should now seize this opportunity to support the NLW and get all the valuable PR which will result.