The Association of Convenience Stores (ACS) has praised the UK Government for taking a “sensible approach” with the publication of the Low Pay Commission’s remit for minimum wage recommendations in 2026, which will retain the two-thirds of median earnings target.
Every year, the Government sets the priority areas that the Low Pay Commission should consider when making its recommendation for the next set of National Living Wage (NLW) rates. This year’s remit, published on 5th August, confirms that the Government has asked the Commission to ensure that the NLW rate does not drop below two-thirds of median earnings.
The Commission has also been instructed to take into account the cost of living; inflation forecasts between April 2026 and April 2027; the impact on the labour market; business and competitiveness; and carefully consider wider macroeconomic conditions.
In its submission to the Commission earlier this year, ACS outlined the measures that retailers are taking when faced with significant increases in their wage bills. This year’s increase has been particularly challenging for many, as the NLW increases were coupled with increases in Employer National Insurance Contributions (NICs) and a reduction in the threshold at which they start paying NICs. The most common responses to increases in employment costs this year by retailers have been taking lower profits, increasing prices, and reducing the number of staff hours in the business, stated ACS.
The ACS submission called on the Commission to take a measured approach to future headline rate recommendations that doesn’t exceed the current two-thirds of median earnings target and explicitly takes into account the impact of rising employment costs on businesses. ACS has also recommended a phased approach to NLW eligibility, so that one age group at a time is brought into being eligible for the headline NLW rate instead of a direct jump from 21 down to 18.
The current central estimate for two-thirds of median earnings is £12.71 per hour, which would mean an increase of 4.1% next year. However, the Commission has stated that there are challenges with predicting this figure accurately, so have predicted a range of between £12.55 and £12.86 per hour. The LPC will make its final recommendations to Government by the end of October 2025.
ACS chief executive James Lowman said: “We welcome the sensible approach that the Government has taken in retaining the two-thirds of median earnings target for 2026, but the range of figures being considered for next year will still result in significant cost increases for retailers and subsequent difficult decisions, such as reducing paid working hours and delaying investment decisions. We will continue to work with the Commission to outline the impact of rising wages on our sector.”
Recent survey findings from the Scottish Grocers’ Federation showed that more than 97% of respondents were less likely to hire more staff, due to the 2025 wage increases. Nine out of ten of owners/managers reported working over 55 hours per week, just to keep costs down. A collaboration between SGF and University of Stirling revealed that the true cost for Scottish retail employers of the 2025 NLW increase would be as much as £16.72 per hour.
