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Minimum wage rise set to increase pressure on hospitality firms

30 March 2017 by
Minimum wage rise set to increase pressure on hospitality firms

Increases in the minimum wage set to take effect on 1 April 2017 are expected to directly benefit up to 2.3 million workers.

But the Low Pay Commission, an independent adviser to government, which carried out an assessment of the anticipated consequences of the higher rates, indicated that the rises will also create pressures for employers.

Bryan Sanders, commission chair, said that minimum wage increases will cover more workers than ever while ripple effects will benefit people earning above the minimum as well.

"Accompanying pay increases there will inevitably be pressure for employers. Early data on employment effects remain inconclusive. While the labour market is performing strongly overall, there has been some weakening in employment growth across some low-paying occupations since 2015, though others are still seeing employment grow."

The new rates will raise coverage - the number of workers paid at or below the minimum - for the minimum wage as a whole by up to 300,000, from two million jobs (7.3% of the cohort) in April 2016 to up to 2.3 million (8.5%) in April 2017. Just over 1.5 million workers were on the minimum wage in April 2015 (5.6%).

The report found that gains and pressures are set vary sharply by nation and region. Northern Ireland is set to have coverage of almost 13%, while the North East, East Midlands and Yorkshire and Humber will have coverage approaching 11%.

Coverage is set to be much lower in London (4.8%), the South East (6%) and Scotland (7.7%).

But differences can be as significant within regions, as between them. In London, eight local authorities have expected coverage above the UK average (8.5%).

From 1 April, National Living Wage (or National Minimum Wage, depending on their age) will increase to £7.50 per hour.

The rate for 21- to 24-year-olds will increase to £7.05 per hour, for 18- to 20-year -olds will be £5.60 per hour and 16- to 17-year-olds will receive £4.05 per hour. The apprentice rate will increase by 10p to £3.50 per hour.

Visit https://www.gov.uk/government/organisations/low-pay-commission to read the full report.

Top 10 excuses for failing to pay workers the National Minimum Wage >>

Round table: The effect of the National Living Wage in 2016 >>

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