The chief executive of retail giant Next has delivered a sobering assessment of the government's National Living Wage increase, warning it could cost the UK economy up to 100,000 jobs while simultaneously driving prices higher for consumers.
Lord Simon Wolfson, the Conservative peer who has led Next for over two decades, stated that while he supports the principle of higher wages, the rapid increase to £11.44 per hour from April 2024 presents serious challenges for retailers already grappling with thin profit margins.
The Ripple Effect Across Retail
Wolfson explained that the substantial wage hike would create a domino effect throughout the retail sector. "The problem with the National Living Wage is that it doesn't just affect the people on the National Living Wage," he noted during a recent interview.
When entry-level wages increase, businesses feel compelled to raise pay for more experienced staff to maintain traditional pay differentials, creating additional financial pressure that many retailers cannot absorb.
Price Rises Inevitable for Consumers
The Next boss warned that customers will ultimately bear the cost through higher prices. "There's no magic money tree" to fund these increases, Wolfson emphasised, indicating that retailers have limited options beyond reducing staff numbers or passing costs to shoppers.
This comes at a particularly challenging time for consumers already facing a cost of living crisis with elevated food, energy and housing costs.
Broader Economic Implications
Wolfson's comments highlight a growing tension between wage policy and business viability. While the government aims to improve living standards through higher pay mandates, business leaders argue that without corresponding productivity gains, such measures may ultimately reduce employment opportunities.
The retail sector, which employs approximately 3 million people in the UK, remains particularly vulnerable to such wage pressures due to its labour-intensive nature and competitive pricing environment.
