Hospitality pay gap narrows between London and the North

19 July 2016 by
Hospitality pay gap narrows between London and the North

The pay gap between hospitality staff in London and those in the North has narrowed significantly since the introduction of the National Living Wage (NLW).

New figures by global software company Fourth has revealed the pay gap between London and regions north of the M25 has narrowed from 25p per hour in 2014-2015 to 10p per hour in 2016, after the NLW was set at £7.20 per hour in April this year.

Companies outside London have seen a sharp increase in staffing costs, whilst those inside the capital have the added pressure from the Living Wage Foundation to provide a £1.15 per hour regional pay gap, which may not be possible following the rising costs.

The data also revealed the average pay of a hospitality worker over the age of 25 was £7.47 per hour in June 2016, 27p per hour higher than the mandatory living wage.

The industry's sales per hour has continued to grow, rising 10% between 2014 and June 2016, but the percentage of sales that go toward wages has also risen by 0.6%.

Pubs were the highest performing sector, with hourly sales rising by 13% and wage costs decreasing 1%. This is partly down to the age and flexibility of pub staff; 20% of pub employees are under 21, meaning they do not qualify for the NLW (which applies only to those aged 25 and over), and work flexible shifts.

The percentage of sales spent on less flexible salaried staff in the pub sector has decreased from 7.3% to 7%.

In comparison, restaurants' hourly sales have risen 5% and core wages by 0.6%. Quick service restaurants' hourly sales have remained flat and core wages have risen 2%.

Mike Shipley, analytics & insight solutions director at Fourth, said: "Our figures indicate that with the exception of pubs, the industry is continuing to pay a premium wage above the living wage to attract high quality staff.

"The pub sector has managed to mitigate costs thanks to the utilisation of intelligent rota software, the flexible nature of its shift patterns and the abundance of young staff on its rosters. This said, challenges lie on the horizon.

"It is a complex challenge but one that can deliver substantial productivity gains, and that is surely the key to weathering what is clearly a new era of labour inflation for hospitality."

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