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Yesterday (8 July), Chancellor George Osborne delivered his seventh Budget to the House of Commons, during which he announced the introduction of a compulsory National Living Wage. From April 2016, employers will be required to pay staff aged over 25 at least £7.20 an hour, with the figure expecting to rise to £9 an hour by 2020.
Perhaps unsurprisingly, the introduction of a new National Living Wage is predicted to have a significant impact on the hospitality industry. According to a Big Hospitality article, numerous trade bodies have warned that the increase will lead to more administration and greater wage bills for employers.
Deputy chief executive of the British Hospitality Association (BHA), Martin Couchman, believes that the hospitality industry will be most affected by the new wage. He commented: "A very substantial part of the workforce are paid at the higher National Minimum Wage rate and they are the ones who will be paid the compulsory National Living Wage. It will also mean that from April the accounts department will have five different wage rates to deal with.
"With less than a year's notice many employers will be getting the cold flannel out and starting to look at the impact now of this news."
The Chancellor also revealed that Corporation Tax is being slashed to 19% in 2017 and 18% in 2020, while employer National Insurance bills are being cut by another £1,000 from April 2016. These two factors could help to counterbalance the impact of the National Living Wage for businesses.
Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers (ALMR), said it was important for the Government to be considerate of hospitality businesses over the introduction of the Living Wage, taking into account pay factors such as benefits and total earnings, and not just the 'headline hourly rate.'
Nicholls said that the Government's plans to create more apprenticeships and limit the amount of red tape surrounding them, both of which are great pieces of news for the sector.
