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Hospitality and the effect of The National Living wage

It has been just over two weeks since George Osborne delivered his 2015 Budget and the response to the introduction of the National Living Wage has been mixed, with larger corporations and employees approving of the move forward, whilst SME’S and the Hospitality and Retail sectors are concerned at the impact and the lack of consultation prior to the decision being announced.

The National Living wage of £7.20 per hour will be paid to all over 25 year olds as of 1st April 2016 with the amount rising to £9.00 per hour by 2020. This ruling does not have much of an effect on larger corporations and blue chip companies who pay an average of £13.28 per hour but the Hospitality sector will be hit hard as most of its employees are paid the current National Minimum Wage of £6.50 per hour.

The Government have tried to offset the pay increase by reducing corporation tax and lowering Employer’s National Insurance Contributions, but the British Hospitality Association (BHA) fear this will not be enough for the high service/low margin hospitality providers and the ruling could lead to many establishments reducing their workforce or going out of business altogether. Whichever way you look at this there is no doubt the ruling is going to have a major impact on the hospitality sector.

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