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The number of jobs across the UK retail industry will reduce because of technology and the rising minimum wage, the British Retail Consortium (BRC) has warned. The industry trade body predicts that up to 900,000 jobs would disappear in this sector by 2025. It added that the threat may be greater for small businesses and poorer areas as they would find it difficult to adapt.
This marks about a one-third fall from the three million people currently employed by British retailers. While the current figures translate to one in six British employees, the retail sector currently accounts for 10% of the economy.
Charlie Mayfield, chairman of the BRC and upmarket department chain John Lewis, said: "What matters is who and where will be affected most by all this change. These are the valleys to cross and the path through them needs to be charted with care."
Sir Ian Cheshire, chairman of Debenhams, concurred with the predictions by the BRC. He said there wasn't any doubt about the fast changing nature of this sector and that "there will be fewer retail jobs in the future".
Dave Lewis, the chief executive at Tesco, opined: "The combination of price deflation, business rate rises and growing labour costs is putting increasing pressure on a highly competitive sector, which is already going through a time of great change."
However, on the upside, the BRC said the rise in wages coupled with improved productivity would translate to "fewer but better jobs" in the near future. Industry analysts opined that because of the shift towards online shopping, the loss in jobs at traditional retail stores would be offset by jobs in call centres, technology operations and delivery networks.
This warning by the BRC comes a month ahead of the introduction of the "national living wage" (NLW) by the UK government, according to which all employees aged above 25 years will have to be paid a minimum of £7.20 (€9.13, $10) an hour. This minimum wage is expected to be increased to £9-an-hour by 2020.
Asking for changes in the NLW on the basis of the impact it would have on different regions and sectors, the BRC called on the government to allow the Low Pay Commission, the body in charge of monitoring the effects of the NLW policy, a stronger mandate to make recommendations on the way the minimum wage should be increased.
The UK official estimate, however, gave a different picture. According to it, the jobs that could be lost because of the NLW would be only 60,000 by 2020. Chancellor George Osborne said the NLW would help the country out of its "low-pay, low-productivity trap". He explained that since employers will have to pay more to the same low-skilled staff, they will improve training of these staff to make them "worth" the higher compensation, according to The Financial Times.
A Treasury spokesperson also spoke in favour of the NLW and said it would create more jobs. "We are already seeing record employment rates and more people in employment than ever before. And taking into account the national living wage the independent Office of Budget Responsibility expects employment to rise by a further 1.1m by 2020", he said.