TUC on minimum wage and retail jobs

Commenting on the British Retail Consortium national minimum wage survey published today, TUC General Secretary Brendan Barber, said:

Every time they are asked members of the British Retail Consortium predict that an increase in the minimum wage will cause massive job losses and every time they are proven wrong. The Low Pay Commission should ignore the inaccurate misfortune telling of employer surveys and focus on the facts.

Official figures show that although retail employment dipped slightly this year as consumers cut back on spending to clear debts, over the last two years 23,000 new jobs were created in retail. And in terms of setting a future minimum wage the latest figures show a healthy growth in sales.

Briefing note on the survey findings.

It is wrong to seek to blame the recent woes of the retail sector on the minimum wage. There has been a sharp downturn in retail during the last year, but this has been largely due to a pause in spending while consumers paid their credit card bills. In the five years preceding the retail downturn the value of retail sales had increased by 6 per cent per year whilst average earnings had only increased by 4.4 per cent. Clearly retail sales could not keep outstripping annual earnings forever - but this has little or nothing to do with the minimum wage.

The survey overstates the reduction in total employment in the sector - employer surveys have often proved to be far too gloomy when it comes to evaluating the likely effects of increasing the minimum wage. The authoritative ONS Labour Force suggests that there was a fall of 20,000 retail sector jobs in the year to spring 2006, which amounts to a reduction of 0.8 per cent of the workforce. However, it should also be noted that there had been a 43,000 increase in the sector during the previous year.

What really matters are the prospects for the sector in the coming period. If retail sales grow, the employment in the sector will start to increase again. The Office of National Statistics reports that the prospects are quite good:

ííUnderlying growth in retail sales slowed slightly in August, but remains robust when compared with the average in recent years, despite decreased sales in August by retailers of food and drink.

The volume of retail sales in the three months June to August was 1.5 per cent higher than in the previous three months. This follows 1.9 per cent growth in the three months to July and compares with an increase of 0.8 per cent at the same time in 2005. The average three-monthly growth rate over the last five years is 1.0 per cent.íí (ONS Website)