Tesco chief Dave Lewis warns increased costs will undermine wider social gains
The national living wage, the introduction of an apprenticeship levy and increased business rates will amount to a “potentially lethal cocktail” for an already struggling retail industry, Dave Lewis, the chief executive of Tesco warned the CBI conference.
He said that employment and skills would both be put at risk as multiple policy changes make current business models “unsustainable”.
The Tesco chief said the retail industry contributes well over 5 per cent to the UK’s GDP, and had in recent years made significant gains in improving social mobility across the country, both of which could be put at risk with multiple policy changes in the next few years.
“Supermarket retailing is more evenly spread geographically than financial services and manufacturing, with 42 per cent of 16 to 17 year olds working in retail. It’s a valuable first experience of working life.”
But, Lewis told delegates, business rates for the retail industry have reached £8bn, which is “significantly more than any other sector”, and skills and jobs had been “sacrificed” as a result.
“The unintended consequences of the living wage have not been thought through,” he said.
“At Tesco we have a good history of paying well – and we were supportive of the living wage when it was announced. But a balance has to be struck between allowing investment for growth and collecting taxes through mechanisms like the apprenticeship levy which wipes out the equivalent of our whole training budget,” he added.
Lewis urged the government to consult with retailers and devise a way to cut business rates and ease the burden of wage hikes on the retail sector.
He said each year, the retail industry invested £1,500 into every employee’s training and development, and with three million people currently in employment in retail, the increased costs on employers would have “huge consequences for the wider economy, for social mobility, geographical balance, training and for employment more broadly”.
Lewis added: “Our concern, and the concern of many colleagues, is that there is pressure to increase base pay at the expense of benefits.
“We shouldn’t simply strip down employment to an hourly rate or draw arbitrary lines. It’s more complex than that.”
Lewis requested more collaboration between employers and government to “find common goals rather than imposing unilateral decisions”.
In a separate report out today, the OECD has warned that plans to increase the national minimum wage could harm the UK government’s record of employment, which, earlier this year reached its highest rate since comparable records began in 1971.
“The magnitude of impact is uncertain, but a higher minimum wage could hurt employment by pricing out low-productivity workers from the labour market and result in losses of competitiveness if not matched by stronger productivity,” the report said.