Piles of coins

FWD’s Final Word: National Living Wage

Haven’t we discussed the National Living Wage (NLW) before?

Yes, but it’s one of the most important issues for FWD members and their retail and catering customers. It’s the statutory national minimum wage for those aged 25 and over, and in April it went up by 4.9% from £7.83 to £8.21. The Low Pay Commission (LPC), which recommends these increases, estimated that the increase will benefit around 2.4 million workers.

That’s good, isn’t it?

It’s hard to argue against offering a fair wage to our lowest earners. Many of our members pay above the NLW to attract good people and reward their teams.

Exactly. So what’s the issue?

In 2017, the rate was £7.50 an hour, so in two years wage bills have soared in our sector and elsewhere. It’s not just the lowest paid who benefit as you have to maintain pay differentials, so it’s putting a lot of pressure on wholesalers to pass on the costs to their customers, who have the same issue themselves.

What are wholesalers doing to mitigate the increase?

Wholesalers and their retail and foodservice customers rely on good people. So much of the value for customers and consumers comes through relationships, and our members know the value of promoting people through the ranks – but something has to give if wage bills continue to increase as they are.

Technology increasingly offers us ways to carry out processes with fewer people, so at the point where those alternatives become more cost-effective than creating jobs, above-inflation NLW rises start to have the opposite effect to the one they’re supposed to.

So why is this happening?

It’s a popular policy. The OECD, a global intergovernmental forum, defines a living wage as 66% of median earnings. We will be at 60% next year, so there’s still a fair way to go yet.

Both the Conservatives and Labour have committed to further, steeper rises and their competition with each other over this will add to the inflation. What we need to do, as the wholesale sector’s representatives to government, is make sure the LPC understands the impact that its recommendations will have on employment and prices if it adopts the kind of rises that politicians want.

How do you do that?

Fortunately we’re not alone in our concerns. Earlier this year, FWD convened a meeting of trade associations in food and hospitality to discuss NLW impacts across sectors supplied by wholesalers.

This month we’re holding a roundtable in Parliament with relevant MPs and officials to present the industry’s views on issues around increasing wage rates and the knock-on impacts to ensure our views are represented to government. A joint letter from the group will be sent to the Chancellor and the Secretary of State for Business, setting out concerns and key recommendations in relation to the proposed increases in the minimum wage.

Sounds promising…

We’ve also surveyed our members for their views, which we’ve compiled in our response to the Low Pay Commission’s consultation on future NLW rates. We’ll be giving oral evidence to the committee on 17 July and we’ve invited our members to come along and share their experiences directly.

FWD National Living Wage Wholesalers