The retail sector could see 900,000 job losses and 74,000 shop closures over the next decade as a result of rising costs, a report by the British Retail Consortium (BRC) has found.
The trade body said that the introduction of the National Living Wage and new apprenticeship levy - two of chancellor George Osborne’s flagship policies - could speed up job losses.
The retail sector in the UK employs three million people and the more “economically fragile” parts of the UK are likely to be hit the hardest, the BRC said. There are currently 270,000 shops and the report indicated that 74,000 could shut, with 30% in Wales and the North of England.
The BRC report says that the effects of the National Living Wage on employment "have been under-estimated", with the cost to the sector coming in at £3bn a year.
In April, the National Living Wage will come into force at a rate of £7.20 an hour for the over-25s, replacing the present minimum wage of £6.70 per hour, to increase to £9 an hour by 2020. Independent bookshops have previously warned they will be hit harder than chain stores by the increase in the National Living Wage in April.
Matthew Clarke, owner of the Torbay Bookshop in Paignton, has said: “You cannot get money out of nowhere, so something gets squeezed. It depends which members of staff are on Minimum Wage and which are not. Even if the first rise is not going to be a huge bill, it is always a challenge when overheads suddenly go up. What that means is some other areas have to be looked at, and money saved.”
Meanwhile Ron Johns, the owner of four bookshops in Southwest England, said: “We are between a rock and a hard place. We want staff to earn as much as possible but we do provide training to people too, and at £9 an hour we would have to have a staffing review. We will have to look at our staff costs and numbers as it approaches, which is the last thing I want to do because we have good staff and we need them all. To me that makes no sense.”
Sir Charlie Mayfield, chairman of the British Retail Consortium (BRC) and head of the John Lewis Partnership, said that although retailers supported the introduction of higher pay, there would be an effect on employment.
He told the BBC: "People are not realising just how significantly the workplace is changing and I think that is dangerous. It means that people assume that somehow things are going to carry on as they are, when that's unlikely. Some of the places that will be affected will be some of the most economically fragile."