Operators split over impact of living wage

At last week’s PMA500 event in Nottingham for multiple operators, delegates were asked to vote on whether the NLW would be good or bad for the trade. Almost half (46%) believed the policy was good news for the sector but 29% disagreed while the rest were unsure.

The picture was even less clear when it came to how big an impact operators thought the NLW, which will see an hourly rate of £7.20 paid to those aged 25 and over, would have on their businesses. Four in 10 respondents rated the ‘impact’ as a seven or above out of 10; but a fifth rated the impact as only five out of 10.

A debate held at the event discussed the benefits of paying staff higher wages, as well as responding to concerns from fellow operators. Participants included BrewDog Bars managing director David McDowall and London-based operator Andrew Fishwick, who both pay their staff enhanced wages, alongside Association of Licensed Multiple Retailers chief executive Kate Nicholls.

McDowall stressed that the benefits of paying staff more — in BrewDog’s case a minimum of £8.25 per hour, rising to £9.40 for those working in London — were far from “fluffy” and brought tangible improvements to
its business.

“It was a massive decision for us, but a year down the line, we’ve seen four or five key benefits”, he said. “Staff turnover has fallen by 25%, which has in turn massively reduced the cost of inducting and training new people. Our like-for-like sales have grown 8%, which we believe is correlated to paying the living wage.”

McDowall added that staff engagement had rocketed and 94% of employees that responded to a survey would recommend BrewDog as an employer.

Andrew Fishwick, who runs award-winning London gastropub the Truscott Arms and wine bar the Truscott Cellar, added that higher wages could help solve the looming recruitment crisis. “We can only deal with problems like the chef shortage if we make this sector an attractive career option,” he said.

However, Nicholls said the issue of pay differentials would hit the sector hard. “It’s not just about the people aged 25 and over. How can you justify somebody who started in a pub at aged 18 and has worked their way up getting paid differently to a 25-year-old who starts on day one? The impact of differentials is huge and that is something the Government refuses to understand,” she said.

“We invest in our people and we have pride in our people. Where we can pay more we do, but it’s about an individual licensee’s ability to pay more when the time is right.”