The Craft Bakers Association (CBA) says around 80% of bakers will have to put prices up when the National Living Wage (NLW) is introduced.
A survey of CBA members about the NLW also revealed around 50% of bakery businesses may have to reduce staff, while a clutch of bakeries would think about closing shops.
The association will submit member’s views with a resume of the impact the NLW would have on its members businesses to the Low Pay Commission (LPC) for its consultation. The government has asked the commission to make recommendations about the wage by October 2016.
Mike Holling, executive director at the CBA said: “I am disappointed that the government didn’t give us an opportunity to consult on the issue before it was announced. Following a survey of the CBA membership, we are putting together a submission of evidence which will be sent to the LPC and we will requesting an audience, as we think it is important to get across the impact this will have on our members and the baking industry.”
The CBA survey also found that many bakers were concerned that the new wage would reduce margins between skilled and unskilled baker workers, and one baker said it would have to increase its prices by between 8 to 10p a loaf.
Another commented: “We are still recovery from recession, this will cause major setbacks. Living Wage will cause closures of many small businesses.”
Holling continued: “At the end of the day, if you are in a key market and prices are sharp already, increasing them is going to talk difficulties. My biggest concern is that they didn’t consult on the impact on the industry in the first place, and now this is what they are going to find.”
The LPC has asked for evidence to be submitted to its consultation, which runs until 25 September 2015.
The NLW will apply from April 2016, at a rate of £7.20 an hour. Once introduced this will become the rate for workers aged 25 and over. Only 21-24 year olds will be paid at the adult rate of the National Minimum Wage.