UKH says ‘scrap national insurance contributions to ease NLW increase’

05-Nov-2019 - Last updated on 05-Nov-2019 at 11:11 GMT

Cost pressures: UKHospitality wants stability of pub jobs, following the publication of a review into a wage raise

The Government must act to ensure wage increases do not lead to pub job losses, trade body UKHospitality has warned.

UKHospitality (UKH) has reiterated its stance that a rise in the national living wage (NLW) should be paired with measures that help pubs cope with the cost pressures.

An independent review into the matter was published this week (Monday 4 November) and its conclusion supported the Government’s pledge to up the wage.

Wage expert professor Arindrajit Dube said there was room for exploring a higher NLW in the UK up to two thirds of the median wage, based on similar raises internationally.

However, trade body UKH has urged this to be partnered with a removal of employer National Insurance Contributions (NICs) on the first £12,000 of staff earnings.

People power

UKH chief executive Kate Nicholls said this measure would help pubs shoulder the initial shock of the new legislation.

She said: “We certainly want our fantastic team members to be rewarded fairly for the great work they do.

"We pride ourselves on being the UK’s foremost experiential sector and the great people who work in our venues are a huge part of the reason we succeed.

“The labour-intensive nature of hospitality means that a significant and sudden increase to the rate of national living wage is going to shock many businesses.

“If the Government is going to push ahead with its plan of increasing the rate to £10.50 over five years, it must also take steps to help businesses on this journey, otherwise we will see job losses.”

Pub stability

Nicholls added: “A very good first step would be to scrap employer National Insurance Contributions on the first £12,000 of salary earned.

“That way, businesses will still be able to give team members the pay rise they deserve, without damaging the stability of the business they work for.”

Chancellor Sajid Javid announced that the NLW will be increased to £10.50 per hour within the next five years during the Conservative Party conference in Manchester, earlier this autumn.

The current rate is equivalent to 60% of median earnings and would be increased to 66%, pushing up the 2024 wage from its current forecast of £9.55.

The Chancellor also announced an intention to lower the age workers can qualify for NLW from 25 to 21 in the same time-frame.

Pub operators shared their mixed views on how wage increases would impact their businesses earlier this year when speaking to The Morning Advertiser.