Forget the living wage, Government must tackle welfare issues, says BRC

The British Retail Consortium, which represents 80% of the retail industry, has warned a future government that instead of focusing on increasing the minimum wage, it should look at the wider socio-economic issues forcing some employees to remain on low salaries.

Minimum wage and the proposed living wage have been used as a weapon by politicians aiming to get voters onside in the run up to election day on May 7.

The Labour Party pledged to increase the minimum wage to over £8 an hour in its manifesto. Meanwhile, the Conservative Party said that no-one on the minimum wage should pay income tax.

British Retail Consortium director-general Helen Dickinson said: “The living wage in itself is a blunt instrument and doesn’t take account that people value the flexibility and diversity of retail jobs, and it doesn’t take into account progression opportunities the industry offers.

“We need to absolutely be getting across the way to sort out the socio-economic problem of low pay; it’s not how much you pay people, but how you progress people.

“The way to answer this social-economic problem is not to put everyone on the living wage tomorrow, but unpick the issues associated with people on low pay.”

Socio-economic issues

Dickinson pointed to social issues including the allocation of free childcare; in some cases if people work over a certain amount of time they potentially loose more in benefits that they gain in pay.

Additionally, Dickinson pointed out that people working part-time do not always have the same career progression opportunities than those who work full-time.

“From a retail point of view, a lot of people work in retail because they want the flexibility of shorter part-time work,” she said. “But there are a myriad of issues we need to unpick.”

She also said employers and employees need to enter into a fair deal. “Whether it is contractual, zero-hours, low-hour or full-time – it has to be based on something appropriate and not abused by either side of the equation.”

Dickinson said that a substantial increase in minimum wage would negatively affect retailers and would have implications for smaller stores in particualr, which may find it more difficult to cut staff numbers to compensate. She said retailers may also be forced to cut staff benefits such as bonuses and discounts.

“Employees wouldn’t end up being any better off,” she said.

Taxpayers subsidising big businesses

Earlier this week, Citizens UK said the low-pay culture across all UK business is costing tax payers £11bn a year because the Treasury is forced top-up incomes with benefits, such as working tax credits, so that workers can afford a basic standard of living.

The research found some of the UK’s largest retailers – including Morrisons and Asda – are benefiting more from the Treasury in so called ‘wage top-ups’ than they are paying in tax.

But Dickinson said that while the total business benefits bill for these top-ups was £11bn, the retail industry alone pays £19.5bn a year in tax.

“What they’re doing in their analysis is only looking at corporation tax, but across retail every £1 paid in corporation tax, £2.31 is paid on business rates.”