The Government's NLW, which is an obligatory minimum wage for workers in the UK aged 25 and over, is currently set at £7.50 per hour – 62p lower than the hospitality sector’s average hourly rate of £8.12.
Fourth Analytics analytics and insight solutions director Mike Shipley said the reason hospitality wages are higher was because “operators want to compete to retain the best employees in the industry”.
Extent of wage inflation
The news comes hours before the UK votes in the snap general election tomorrow (8 June), which will determine NLW increases over the next five years.
The Conservative party has pledged to raise the NLW to 60% of median earnings in its manifesto, while Labour has pledged to raise the national minimum wage to £10 an hour for all workers aged 18 and over by 2020.
“Regardless of the result in tomorrow’s election, it’s evidently clear the hospitality industry will continue to face increasing wage cost pressures, the only question is how great they will be,” said Shipley.
Shipley said that because the average NLW rate could reach £10.85 or more by 2020, operators will potentially need to “improve efficiency or reduce employee numbers” to balance the books.
Financially rewarding
The Association of Licensed Retailers (ALMR) chief executive Kate Nicholls said these figures positively showed employment in the sector could be financially rewarding, but agreed that wage increases “must be sustainable”.
“Any increases in rates must not be politically mandated. They need to reflect economic conditions and be affordable for employers otherwise jobs themselves may be at risk,” she said.
As such, the ALMR has recommended that the Low Pay Commission should retain the capacity to set rates for both the national minimum wage and NLW independently.
“The figures show that, when they can afford to do so, employees are happy to reward their staff,” she added.