Former Kingfisher boss Sir Ian Cheshire, who is a government adviser to the civil service, has called for a review of the living wage.
Cheshire told the BBC the living wage’s impact on employment rates and wage costs remains unclear and wants a review to ensure it is not too onerous for businesses.
Cheshire, who is the Government’s lead non-executive adviser to the civil service, has called for a review in 2017 involving the Low Pay Commission, the body that traditionally recommends to government the minimum wage level.
Starting next April, the minimum wage for those over 25 will rise from £6.70 an hour to £7.20 and then increase again to £9 an hour by 2020.
National Living Wage
Chancellor George Osborne surprised businesses by revealing his National Living Wage in July, which goes above and beyond the recommendations of the Low Pay Commission.
Cheshire said: “I think the real challenge is in the outer years – when you start to get to £9 and that starts to be a very significant increase.
“You’re talking, in some models I’ve seen inside businesses, of – if you go from here to 2020, wage bills going up maybe 50% or 60%. And that is a very big issue, particularly obviously for people in retail and hospitality.”
Some retailers including Ikea, Lidl, Sainsbury’s and Morrisons have moved early on the living wage by revealing they would introduce it earlier than recommended and offer staff more money than the minimum.