9th Jul 2015 14:25
LONDON (Alliance News) - UK retailers say Chancellor of the Exchequer George Osborne's decision to impose a 'national living wage' causes them less concern than the government's reluctance so far to reform business rates.
The national living wage, which applies to workers over the age of 25, will start at GBP7.20 an hour from April next year, rising to GBP9 an hour by 2020, and will supplement the current GBP6.50 minimum wage. It is part of Osborne's objective to transform the UK into a "higher pay, lower tax, lower benefit society", set out in his Summer Budget speech on Wednesday.
However, British Retail Consortium Director General Helen Dickinson said that median wages for retail employees are already above the new living wage, although this could mean that while some earn more than GBP7.20 an hour, some will still earn less.
"The retail industry is not a minimum wage employer. Median wages for hourly paid workers currently stand at GBP7.30 per hour ? this is already above the rate of the new national living wage announced [Wednesday]," Dickinson said.
"We continue to believe that the real key to raising more people out of low pay will rest in increasing productivity. This will be more effective than playing pass the parcel around the economy with the financial burden of increasing people's incomes. It is crucial that Friday's productivity plan addresses the issues faced by retail businesses and creates a sustainable route to higher incomes," she added.
Dickinson did warn, though, that Osborne's failure to confirm what she described as "much-needed" reform for business rates, is worrying for retailers, despite the Chancellor's pledge to cut corporation tax.
"For every GBP1 retailers pay in corporation tax, they pay GBP2.30 in business rates. The high burden of business rates combined with other challenges retailers experience means that the cut to corporation tax in 2017 to 19% and then 18% by 2020 is welcome but not enough. We now need to see a move to more fairly distribute the burden of business rates across the economy if we want to avoid further shop closures," she said.
Business rates are taxes on non-domestic properties.
Meanwhile, John Cridland at the Confederation of British Industry warned about the hit the living wage may have on smaller businesses. "Legislating for a living wage does not reflect businesses? ability to pay," he said.
"There are some welcome changes in [Wednesday's] budget that will help retailers support job creation and drive growth. However, without knowing the detail of the fundamental reform of business rates the gains from today's budget for retailers and their customers are not clear," the BRC's Dickinson said in a statement following the budget speech on Wednesday.
A spokesperson for the UK's largest retailer Tesco PLC, which claims to pay "one of the highest hourly rates in retail", said: "In line with our approach of offering sector-leading pay, we are supportive of the introduction of the national living wage."
Shares in Tesco were trading up 1.6% at 205.04 pence Thursday afternoon, recovering all of its post-Budget decline.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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