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A third of contractors may ‘have to cut staff’ as living wage increase bites

The latest increase in the national living wage could force one in three contractors to lay off staff, a C+D snapshot poll shows.

In December, the Chancellor Jeremy Hunt announced that the national living wage would rise by 9.8%, from £10.42 to £11.44 this month.

At the time, the sector leaders warned that the uplift would signal a “death blow for many” community pharmacies.

Faced with persistent flat funding and other inflationary cost pressures, contractors warned the funding crunch meant “a single major financial failure” could spark a sector-wide crisis.

Now a C+D snapshot poll between April 5-8 has found that just under a third (32%) of the 96 respondents will “have to cut staff” due to the increase in wages.

Read more: Cuts, overdrafts and closures: Business becoming ‘impossible’ for contractors

Another 35% said their pharmacy was too financially fragile to “handle it right now”.

Meanwhile, 19% said the uplift would be “tight but manageable”.

Just 14% said their business could weather the change.

A government spokesperson told C+D today (April 9) that it "does recognise that this is a significant increase for some businesses.” But it added that the low pay commission, which it said “talks to businesses to understand the impact of rate rises before setting them”, is “pleased to put more money in the pockets of workers.”

 

“We are being squeezed at both ends”

 

Vice chair of the National Pharmacy Association (NPA) and independent contractor Olivier Picard told C+D yesterday (April 8) that it doesn’t surprise him that contractors are thinking of letting some staff go. 

Some will have “no choice but to look at cost-saving in order to survive…you can’t afford to pay your staff then you going to have to,” he added.

He stressed that the impact of the wage increase is “enormous” for the sector.

Read more: DH raises prescription charges for second year running

“The wage rise for my small group of four pharmacies will be equal to about £8,000,” he said.

Picard added that his team “deserve every penny that they get, they work their socks off” and said he has “no issues about paying my staff more”.

But an increase to the national living wage increasing for the third year in a row while pharmacy funding stagnates means that the sector is “being squeezed on both ends”, he warned.

 

Pharmacy staff should be paid “more than the minimum wage”

 

Meanwhile, commenters on C+D’s poll suggested that the “a need to cut staff reveals a deeper flaw within the pharmacy paradigm”.

One commenter said that they have “long maintained the belief that approximately 90% of dispensary tasks can be effectively automated”.

“The primary hurdle often lies in logistics rather than the technical feasibility,” they added.

Read more: Well Pharmacy reveals £29m loss in 2023 amid ‘significant challenges’

Another commenter said that dispensers “should be [on] more than the minimum wage. There is a lot of responsibility for them to get things right when dispensing”.

Last week, C+D reported that Well Pharmacy directors attributed the multiple’s £29 million 2023 losses in part due to “wage pressure” from an increase in the national living wage.

And last month C+D Salary Survey revealed that four in ten (40%) contractor respondents said that they had to “cut back on holidays” and 17% said that they took out or extended a loan.

 

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