Proposed wage hike will have “little impact” in hospitality industry: Fourth
Data suggests a “steady erosion” of the wage gap between the two age cohorts.
The recent announcement about the National Living Wage (NLW) rising to £10.50 by 2024 for all those aged 21 and above will have “little impact” in the hospitality industry, according to global software provider Fourth.
New data from the company revealed that current average hourly wages in the hospitality industry are on track to hit £10.60 over the next five years, having “consistently outstripped” the annual NLW legislative increases since its introduction in April 2016, with hourly wages growing by around 4% per year.
British finance minister Sajid Javid earlier proposed to lower the age threshold for the £10.50 band from over 25 year olds to those over 21 years of age.
Citing “a desire...to attract and retain the best talent” and an increasing number of companies introducing pay parity across their business, Fourth suggested that there already has been a “steady erosion” of the wage gap between these two age cohorts, which has remained around 2% for the past six months, remaining at £8.55 and £8.70, respectively.
The statistics were mined Fourth Analytics data on the hourly pay of thousands of hospitality workers and represents the restaurant, QSR and pub sectors. The data also showed that all age brackets are currently earning higher than their respective bracket and the gap between the hourly wage of age brackets has shrunk further.
The average pay of those aged between 18-20 is £7.88 – £1.73 higher than the current threshold of £6.15.
“The actual average hourly wage in the industry has been consistently tracking ahead of the annual legislative increases, since its introduction in 2016, and if we continue at our current rate of inflation we are on track to meet the target figure of £10.50 for over 21s within five years,” Fourth analytics & insight solutions director Mike Shipley said.
“In the face of this aggressive period of wage inflation, and with the potential for accelerated increases on the horizon, it’s imperative that operators are looking at ways to offset costs through productivity programmes and smarter scheduling.”
Whilst the NLW hike is unlikely to drastically impact the sector, Fourth suggested that businesses will be more concerned about the potential impact of Brexit on the supply of labour, with the data revealing a potential for further wage pressures on the horizon, with a reduction in the number of EU workers, which currently make up 46% of the industry workforce.
Since the start of the year, around half (49%) of workers leaving the industry are from the EU, whilst the proportion of EU workers starting work in the industry is down from 46% to 43%, making a variance of around 6 percentage points.
Analysing average wages by sector, results show that workers in quick service restaurants, a sector with a “high bias” of EU workers, continue to command the highest hourly wage, at an average of £9.85, whilst the average wage of £8.75 in pubs is ahead of that paid to restaurant workers, which stands at £8.52.
The statistics show that EU workers’ average hourly wage, £8.70, is higher than that of workers from the UK (£8.19) but lower than those from the rest of the world (ROW), £8.98. These figures, Fourth says, encompass the large numbers of EU and ROW workers currently employed in skilled back of house roles.
