The BHA has been fighting on behalf of its members by lobbying Government to commit to the National Living Wage (NLW) being set by the Low Pay Commission (LPC). Not only that but also for Government to alleviate the impact of the NLW by extending the relief on employers’ National Insurance Contributions for under 21s to all workers under the age of 25.
More recently, the BHA together with ALMA and BBPA prepared a submission to the LPC. The submission outlined our asks, as mentioned above, and put forward evidence of the effect on our industry, the economy and employment should the current system continue and our recommendations to Government.
The submission points out that the introduction and subsequent increase in the NLW has come at exactly the same time as other unforeseen cost increases and at a time when revenue is weaker – in volume and in value because of macro-economic trends in growth and earnings; this convergence of complementary pressures on margins is what many refer to as ‘the perfect storm’ for hospitality and tourism businesses.
Furthermore it argues that we will soon be reaching a ‘tipping point’ where businesses will fail, new openings are postponed and the physical product deteriorates for lack of investment. Evidence such as that from the Institute for Fiscal Studies states that, 'there must be a point beyond which higher minimum wages have substantial negative impacts on employment.'
It’s worth pointing out that a reduction of 1% in employment levels in the sector across the UK is equivalent to just over 30,000 jobs – and hospitality has been one of the sectors which has provided a great opportunity for young people and returners to the labour market.
In addition, supplementary evidence presented (which was not published but sent to the Commission’s Secretariat on a private basis), further revealed that on its own, the NLW would lead to a 25% erosion of margin and threaten 150,000 jobs by the time the 60% target had been reached in 2020. The sheer scale of the increase in costs for the hospitality industry was estimated, by KPMG, at £1.4 billion for 2016.
This submission will aid the BHA in its lobbying efforts to see the next government give the LPC the responsibility for recommending all future NLW rate increases on exactly the same basis as it does for the National Minimum Wage suite of rates.
We will keep you updated as this progresses. If you would like to discuss our efforts on NLW with us, please contact firstname.lastname@example.org.