Minimum wage threatens small pub companies

The minimum wage is in danger of spiralling out of control and threatening the viability of many small pub companies.

Half of all pubs have already cut staff as a result of recent increases, and the threat of a £6 minimum wage - as demanded by unions - could spell disaster for many small pub operators.

Our survey shows it is now having a very real impact on consumer prices, business profitability and investment decisions - that is bad news for everyone, including staff​Nick Bish ALMR chief executive.

Survey​That is the findings of a survey of 21 Association of Licensed Retailers (ALMR) member companies, between them operating just under 1,000 outlets. It was presented to the Low Pay Commission as part of its review of minumum wage.

The survey found that gross employment costs have increased dramatically in the two years since the minimum wage was last reviewed - up from a fifth to a quarter of total turnover.

As a result, 90% of respondents said they had to increase prices and 84% said profits had been hit.

Cut staff​Companies have been forced to cut staff, reduce hours and employ cheaper workers to cope.

The ALMR recommended to the Low Pay Commission that minimum wage should only increase if necessary, and then only in line with inflation.

And it warned that further large increases could prove unsustainable for the trade.

ALMR chief executive Nick Bish said: "When the NMW [national minimum wage] was first introduced, it was designed to be a floor below which wages should not fall.​

"Following seven years of successive, swingeing increases - well ahead of inflation - it is now 50% higher.

Dramatic​"And that has had a dramatic and devastating effect on many small businesses within the sector."

"We have gone from a situation where bar staff were paid well above the minimum, to one where the NMW is now the average wage in the sector.

"Our survey shows it is now having a very real impact on consumer prices, business profitability and investment decisions.

"That is bad news for everyone, including the staff".

Is the minimum wage impacting on your business? Email us by clicking this link​ - please indicate which story you are responding to.

Your Comments​Dave Wilkinson​ via email 26/09/2006"Following on from your article about minimum wage increases, I have been a manager of a pub for a multi-tennant for the last few years. I have been set a wage target of 18.7% by my boss for the last 5 years, which while a few years ago was sufficient for the running of the business, now is practically impossible to work with. It has resulted in both myself and my assistant manager working the bar by ourselves for large portions of the week with no bar staff at all.

In total we are covering the bar to the tune of 65 hours per week between us, and are still having to find the time to do all of the paperwork, and everything else that goes with running a pub.

With the minimum wage set to increase further, and thus more pressure being put on my assistant and me, we are both seriously considering a change in career. We are already both working for under £4.00 per hour! While I may take a slight drop in pay by changing to another trade, I'll only be doing half of the hours (I could take on both a full-time and part-time job and still have more free time than I do now).

The hours I put in now (80-90 per week) are neccessary to keep the business running at a profit, but are also totally illegal.

How can we hope to encourage anyone into this trade in the future when it has become expected for you to do the work of two or three people just to keep the business afloat?"