Compulsory Living Wage could put over 200,000 hospitality jobs at risk

19-Nov-2014 - Last updated on 26-Apr-2021 at 18:13 GMT

At the moment, it is not compulsory for businesses to pay the London Living Wage

Making the Living Wage compulsory could cost UK businesses £4bn, the equivalent of 213,247 jobs in the hospitality sector, according to a Greater London Assembly (GLA) member.

GLA Conservative Tony Arbour claimed it would make more sense for wages to be raised through VAT cuts in the sector, and said it was important to ‘think practically’ about how to get more Londoners on the Living Wage.

“It’s an ideal win-win situation for businesses, employees and the public purse,” Arbour said. “It puts more cash into people’s pockets and improves working conditions. But forcing firms to sign up to this, especially start-ups and small businesses - such as B&Bs, restaurants and coffee shops – will only hurt them and may even put them out of business.

“What we need instead are common sense measures designed to ease the burden on business and boost pay for employees, such as VAT cuts in the hospitality sector.”

Arbour pledged to work with the Mayor of London and lobby the government to ensure that pay rises could take place ‘without the need for price hikes or sackings’.

“These tax cuts will pay for themselves through reduced dependency on in-work benefits and increased tax revenues,” he added.

Labour response

London Assembly Labour economy spokesperson Fiona Twycross disagreed, claiming that compulsory measures could be necessary.

“These criticisms of the London Living Wage are the same as when National Minimum Wage was proposed,” Twycross said. “It would be great if a voluntary approach worked but with the Mayor failing to encourage enough businesses to sign up we have to at least consider whether compulsory measures may be required.”

Twycross stated that 20 per cent of businesses in London do not pay their staff the Living Wage, and claimed that number was ‘going up each year’.

“The London Living Wage is called such because it is what someone needs to live in the capital, paying less than the London Living Wage leaves people unable to make ends meet and that cannot be right.

“Work should pay but for all too many workers in London, their hourly rate is less than the people they serve pay for a coffee and sandwich.”