How has the National Living Wage affected the Hospitality Industry?
From 1st April 2016 the National Living Wage was introduced, which means that all workers aged 25 and over have to be paid a minimum of £7.20 per hour by law (this is set to rise to £9 per hour by 2020). The reason for the National Living Wage introduction is to support the government’s vision of a higher wage, lower welfare, and lower tax society.
The National Minimum Wage will continue to apply for workers aged below 25, currently £6.70 for those aged 21 to 24, £5.30 for those aged 18 to 20 and £3.87 for under 18’s.
How this has affected the hospitality industry?
• Welcome Break, the Motorway service operator have announced that they will pay the National Living Wage to all workers, irrespective of age. This will ensure they continue to attract young talent to the Company.
• A detailed analysis by the Resolution Foundation Think-Tank believes that rises are affordable for the UK Plc, but acknowledges that 46% of all those affected (2.7 million people) work in wholesale, retail and hospitality.
• Premier Inn owner Whitbread have said they have “developed plans” to deal with the new National Living Wage and would mitigate the “substantial cost increase” through productivity improvements, efficiency savings and “some selective price increases.”
• A number of hospitality companies, including JD Weatherspoon, have raised concerns that the compulsory wage increase will lead to higher costs and result in more pubs and restaurant closures, ultimately having a negative effect on the hospitality industry and wider economy.
• Deutsche Bank has warned that “the National Living Wage will place significant pressure on companies in the hospitality industry space and would stunt potential growth for a few years.”
What have some hospitality clients told me?
“Our payroll budgets will not be increased, we need to absorb the costs into the current budget” Hotel GM, South
“We will be reviewing pay at all levels in the business to ensure a differential remains between general roles and Supervisory and management positions” Hotel GM, North West
“We also need to consider the impact on pension contributions, following the introduction of the work place pension” Restaurant GM, South East
“We plan to increase the standard wage across the hotel for all employees, regardless of age. Our minimum wage for all employees has always been the same” Hotel Owner, Midlands
Thank you to all clients who have contributed. I would be interested in hearing more views and views from other industries on the effect of the National Living Wage.





