Living wage burden hits retailers’ shares

SHARES in some of Britain’s big- gest retailers fell after investors reacted to the Chancellor’s surprise move of introducing a new National Living Wage of £9 an hour for workers by 2020.

The step, which will see workers over the age of 25 receive £7.20 from next April, hits firms such as retailers hardest, as they employ large numbers of staff.

Sainsbury’s fell 1.13pc or 2.9p to 254.5p, Morrisons was down 1.47pc or 2.5p to 167.4p, and Marks & Spencer lost 2.52pc or 13.5p to 521.5p.

George Osborne said at the end of his Budget speech that ‘Britain deserves a pay rise’ as he unveiled the compulsory living wage, set well above the National Minimum Wage.

The increase to £7.20 is a rise of 70p on the current minimum rate and 50p above the increase coming into effect in October.

The independent Low Pay Commission will recommend future rises that achieve the Government’s objective of reaching 60pc of median earnings by 2020.

British Retail Consortium director general Helen 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-theparcel around the economy with the financial burden of increasing people’s incomes.’

Earlier in the week a report by accountancy firm KPMG said paying the living wage rather than the minimum would only cost 1.3pc of the national wage bill and bring in £4.5bn in taxes and reduced benefits payments.

However, the Association of Convenience Stores, the lobby group for small shops, criticised the plans as a ‘reckless measure’ that will have a significant negative impact on the sector.

The adult minimum wage has increased from £6.08 an hour in 2011 to £6.50 now, rising to £6.70 in October. The increase to £7.20 will mean an 11pc rise in hourly pay, with a full-time worker earning over £1,200 more than today, according to estimates.