Last year Chancellor George Osborne announced that a new compulsory national living wage will be implemented in April 2016, yet retail jewellers interviewed by Professional Jeweller believe the wage bill-boosting increase will have a muted impact on the sector.
The new National Living Wage will be paid to workers aged 25 or more and will initially be set at £7.20 an hour. The government then intends to increase this to £9 an hour by 2020. Younger employees will still be entitled to current national minimum wage levels.
Employers will be granted six months to implement the new pay level. Both part-time and full-time workers will be entitled to the new wage.
The government has said that the introduction of the national living wage will give a pay rise to 6 million workers, but independent fiscal watchdog the Office for Budget Responsibility believes it will simultaneously cost 60,000 jobs and reduce working hours by 4 million a week.
Independent retail analyst Nick Bubb, who runs a blog called The Daily Retailer, recently said the national living wage was the “biggest threat on most retailers’ horizons”. Bubb explained: “By April of next year this is going to impact heavily on everyone, and with the additional costs comes strategies to counteract. Whether that is to raise prices or invest in workforce optimisation, it’s a challenge that will play a big part on the retail health index in 2016.”
Responding to a survey conducted by the British Independent Retailers Association, more than half of small business owners said they will be forced to raise their prices and cut jobs to reflect the increase in overheads by the time the National Living Wage breaches £9 an hour in 2020.
Despite these gloomy retail forecasts, many business owners in the UK jewellery industry is unfazed about the initial hike to £7.20 in April as many already pay staff an hourly rate that is comfortably above this.
At Judith Hart Jewellers in Derby, wages for staff aged over 25 are above the proposed national living wage, and owner Judith Hart believes this is a common trait in the jewellery industry. “Many jewellers would consider themselves in the luxury end of the market and both need and expect quality service and staff to care for their customers,” she said. “This need for highquality staff ensures that wages, dependent on area, will probably be higher than the norm on the high street.”
Hart’s opinion chimes with that of a number of other jewellers across the country, such as Goodman Morris in Brighton, where all staff are paid at a rate that is above the national minimum wage.
Ethical jewellery specialist Cred, which has stores in London’s Clerkenwell and Chichester also pays its staff wages that are above the high street retail norm. “Jewellery staff are knowledgeable, trustworthy and deal with the public every day,” says Cred director Alan Frampton. “To accomplish all that you need quality people who perform every day. If you pay badly, you will not get the right people for the job.”
While the majority of jewellers seem confident that April’s national living wage of £7.20 an hour will not represent a crippling financial hurdle, the prospect of the second rise in 2020 to £9 an hour is creating slightly more trepidation among jewellery business leaders.
At family-owned retailer Drakes, which has stores in Plymouth and the Southwest, the majority of staff are paid at a rate that exceeds minimum wages but director Andrew Hirshman is concerned about the 2020 rise and has already started to put measures in place to mitigate the effects.
“With regards to the government proposal to move to a £9 national living wage by 2020, this represents a 25% increase over the given years, and therefore a 5% increase per year for the next five years,” said Hirshman, who is also finance director at the Company of Master Jewellers. “We are currently investigating the proposal of introducing a staged approach over the next five years in order to make this transition more financially comfortable.”
While retailers may struggle to navigate 2020’s rise, Peter Wong at Liverpool retailer Wongs also believes that some staff will also face new challenges. He said: “They may find it more difficult to secure jobs when the rate goes up unless they have the necessary skills, and to a high standard. At the current rates we may have employed someone less skilled and trained them up, but that could change.”