Craft bakers are looking at ways to cut overheads after the Low Pay Commission confirmed the minimum wage will rise again in October.
A 30p an hour rise in the minimum wage, which comes into force in October, will take it up from £5.05 an hour to £5.35 for workers over 21, with a 20p an hour rise to £4.45 for staff aged 18-21.
National Association of Master Bakers (NA) senior executive Gill Brooks-Lonican said the NA is getting a number of calls from members to discuss making redundancies to mitigate the costs of paying higher wages. She said the rises in minimum wage were making low-turnover shops unviable. Staff in pay bands above the miniumum wage want similar increases. However, turnover does not rise by the same amount.
“If you reduce staff, the remaining staff have to do more work and then one of them will go off for stress. By the time the money saved in wages by having fewer staff is recouped, you might be out of business.”
Rising wages also make it harder for employers to take on staff who claim Jobseekers Allowance and work under 16 hours a week, as it can take them over the maximum earnings threshold, she said.
Scottish Association of Master Bakers chief executive Kirk Hunter commented: “It is a substantial increase. We don’t believe it is justifiable, particularly on top of other increases craft bakers are facing, such as energy costs.”
Greenhalgh’s bakery production manager David Smart said: “This minimum wage rise equates to a 5.9% increase, and you can’t recoup that through price rises. It has a destabilising effect financially.”
The Low Pay Commission’s report does offer some hope to bakers. It says the phase in which the Commission is committed to increases in the minimum wage above average earnings increase is over.