Under plans unveiled in the Summer Budget yesterday, employers will have to pay all over 25’s a National Living Wage of £7.20 or more from next April.
Hospitality is set to be one of the hardest hit industries, with the British Hospitality Association (BHA) warning of potential job losses in smaller businesses.
Ufi Ibrahim, chief executive of the BHA, said she was ‘very surprised’ that the announcement had been made without prior Government discussion with the sector.
“As an industry employing a large number of individuals earning more than national minimum wage and less than the proposed living wage, we have tried to have a constructive dialogue with HM Treasury on building towards the living wage without job losses,” she said.
“Despite the Chancellor trying to alleviate the pain with adjustments to corporation tax and employment allowances, these changes do not go far enough to reduce the impact on SMEs and mitigate potential job losses across the industry.
“Constructive dialogue with HM Treasury is now imperative to identify measures to counterbalance the Government’s ambitious agenda with the realities of running a high service and very low margin business."
London Mayor Boris Johnson told the British Hospitality Summit last week that the Living Wage could be 'made to work' for businesses, resulting in higher loyalty and productivity from staff.
Industry deserves respect
Speaking at the Serviced Apartment Summit in London prior to the budget announcement yesterday, Ibrahim said the hospitality sector was deserving of greater respect and engagement from the Government.
“This industry represents the fourth largest employer in the UK and the third largest export industry in the services sector," she said.
“When you put things in that context I would say that historically it has not been given the credence it deserves.
“We are still in a position where the Government’s opinion of our industry is that we are fragmented."
Government not listening
Ibrahim said the industry needed to use its status as one of the UK’s largest employers to get the government to listen.
“The only way to ensure we have greater negotiation power with the Government on issues that affect our industry is to find our differentiator – hence our focus on jobs,” she said.
“Over the past three years hospitality has grown at double the rate of other industries in the UK, particularly in terms of our contribution to employment.
“We can use that to be able to get greater power and differentiate ourselves from other sectors – the only other industry that comes close is retail.”
The BHA has made a commitment with London Mayor Boris Johnson to create 7000 apprenticeships by 2016, a figure which it has already surpassed.
It is also aiming to create an additional 300,000 new jobs in the sector by 2020.