Businesses Impacted By Higher Minimum Wage | Application for A-Level Economics

Here are six sectors / industries that are likely significantly impacted by increases in the national minimum wage.

💷 6 UK Business Sectors Impacted by a Rising Minimum Wage

1. Fast Food & Quick-Service Restaurants (e.g. McDonald’s, Greggs, KFC)

These firms rely on young, low-paid, hourly workers, often under 21. A 7% wage increase significantly raises variable labour costs, which may lead to higher menu prices, reduced staffing hours, or increased use of automation (e.g. kiosks) to maintain profit margins.

2. Retail (e.g. Tesco, Primark, Sports Direct)

Retail is a labour-intensive industry with many employees earning near the minimum wage. Higher pay pressures may result in cost-push inflation for consumers or a shift to self-checkout systems and leaner staff scheduling — especially in low-margin, high-volume stores.

3. Hospitality (e.g. Wetherspoons, Premier Inn, Travelodge)

Hotels, pubs, and casual dining rely heavily on cleaners, kitchen porters, bar staff, and seasonal roles — many paid at or near minimum wage. A wage hike increases operating costs and may force firms to cut hours, reduce services, or raise prices, especially in rural areas with thin margins.

4. Social Care Providers (e.g. residential care homes, domiciliary care agencies)

Many care workers are on low pay despite demanding roles. A minimum wage increase boosts staff income but squeezes provider budgets, especially where funding comes from fixed-rate government contracts. This could lead to staff shortages, service cuts, or calls for increased public funding.

5. Beauty & Nail Salons

Small salons often employ apprentices or young staff earning under the full adult rate. A wage rise directly raises labour costs for independent businesses operating on tight margins. Firms may raise prices, reduce staffing, or cut training opportunities in response.

6. Warehousing & Logistics (e.g. Amazon, ASOS, delivery firms)

These sectors employ many workers in entry-level roles like picking, packing, and delivery — often paid close to minimum wage. A 7% increase affects contractors, part-time, and young workers. Firms may respond by investing in automation, increasing output per worker, or revising employment contracts.