National Living Wage to add 3.4% to hospitality wage bills by 2020

By Liam Garrahan contact

- Last updated on GMT

National Living Wage to add 3.4% to hospitality wage bills by 2020

Related tags: National living wage, Minimum wage

Employers in the hospitality industry will see their wage bills increase by 3.4 per cent by 2020 with almost half of employees in the sector receiving a pay rise due to the rollout of the National Living Wage (NLW).

Resolution Foundation’s Taking Up the Floor report found that while around half of employees work in industries that will see an increase of 0.6 per cent, the impact on the hospitality industry will be significantly larger, despite the fact that one-third of staff are under the age of 25 and are ineligible for the new minimum wage structure.

Conor D’Arcy, policy analyst at Resolution Foundation, said that past warnings about the negative effects of the minimum wage on employment were “wide of the mark”, but acknowledged that the size of the wage increase will be a challenge for the hospitality industry.

“The National Living Wage will give a welcome wage boost to six million workers. Pay rises don’t come for free, and the expected rise will take the wage floor into uncharted territory. But with the economy getting stronger the vast majority of employers should be able to afford the new higher wage floor, which will allow their lowest-paid staff to share in the recovery,” he said.

The report follows last week’s comments from JD Wetherspoon boss, Tim Martin​, who feels that the NLW will put pressure on pubs in less affluent areas.

“By pushing up the cost of wages by a large factor, the government is inevitably putting financial pressure on pubs, many of which have already closed,” he said.

“This financial pressure will be felt most strongly in areas which are less affluent, since the price differential in those areas between pubs and supermarkets is far more important to customers."

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