BigHospitality reports on Fourth's findings on the NLW
The hospitality industry is paying workers over 25 an average of 27p above the National Living Wage (NLW) a wage survey has revealed.
Data collected by hospitality software company Fourth Analytics from 4,000 workers across the sector found that, onaverage, hospitality businesses were paying staff £7.47 per hour 27p above the NLW of £7.20.
Since the NLW was introduced in April, the regional pay gap between businesses in London and those north of the M25 narrowed by 15p as businesses outside the capital raised wages to meet the new rate.
While hourly sales have increased by an average of 10 per cent in the last two years, Fourth's analytics and insight solutions director Mike Shipley warned that further wage increases could put pressure on operating margins with the average hourly rate predicted to rise to £9.45 by 2020 based on historic statistical trends.
“Our figures indicate that with the exception of pubs, the industry is continuing to pay a premium wage above the living wage to attract high quality staff," he said.
“According to the latest figures from CGA Peach, 65 per cent of CEOs think the target living wage of £9 by 2020 is unrealistic. And, given that our current calculations indicate that actual pay could rise as high as £9.45 in 2020, coupled with added pressure on the industry from chef shortages, increasing wage competition from retailers, uncertainty stemming from Brexit and increases to living wages for under 24s, it’s imperative operators look at ways to improve their efficiency."
Shipley advised businesses to offset costs by working hard to improve sales at peak times and cutting labour during quieter periods rather than reducing staff benefits or overtime rates.
“It is a complex challenge but one that can deliver substantial productivity gains, and that is surely the key to weathering what is clearly a new era of labour inflation for hospitality," he said.
While the introduction of the NLW has seen wage bills increase, a survey by BigHospitality found it was having a minimal impact on recruitment plans with 68 per cent of employers saying they had not made any changes to their staffing since it came into force in April.
The biggest problem is finding staff with the right skills, the survey found.