Hospitality Industry Workers Paid More Than NLW

National-Living-Wage-LogoWorkers in the hospitality sector are paid on average £7.47 an hour, which is 27p higher than the mandatory living wage according to research by software company Fourth.

Research also revealed that sales per hour in the hospitality industry has shown sustained growth, rising 10% between 2014 and June 2016, while the percentage of sales that go towards wages has risen 0.6%.

The highest performing sector during this period was the pub sector, with hourly sales growing 13% and wage costs decreasing 1%. In comparison, restaurant’s hourly sales have increased 5% and their core wages have risen 0.6%, while QSR hourly sales have remained flat and core wages have risen 2% – a rise of 2.4% over this period.

In addition, the percentage of sales spent on less flexible salaried staff in the pub sector has decreased from 7.3% in 2015 to 7% according to latest available data. While, 9.9% of the money generated from sales in QSR is spent on staff salaries, up from 8.1% in 2015, and the restaurant sector has remained relatively stable, with salaries as a percentage of sales at 6.3%, up from 6.1% in 2015.

Mike Shipley, analytics and 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.

“According to the latest figures from CGA Peach, 65% of CEOs think the target living wage of £9 by 2020 is unrealistic. And, given that our current calculations indicate that actual pay could rise as high as £9.45 in 2020, coupled with added pressure on the industry from chef shortages, increasing wage competition from retailers, uncertainty stemming from Brexit and increases to living wages for under 24s, it’s imperative operators look at ways to improve their efficiency.”

The figures also reveal that men are paid an average of £7.53 (in 2016), which is 1.9% more than women, who are paid £7.40 on average. The largest gender pay gap in favour of men is in the restaurants sector.

Demographic data shows that males make up over 75% of chefs and kitchen staff, so the imbalance can be attributed to employers compensating back of house staff for a lack of opportunity to earn tips with inflated wages, thus skewing the figures, Fourth suggests.

Based on purely historic statistical trends, the actual average hourly wage could rise to as much as £9.45 by 2020 – 45p higher than the planned £9 (the new rate by 2020).

Shipley added: “While some companies are looking to offset costs by reducing staff benefits or cutting overtime rates – which carries high reputational risk – we’re working with many different hospitality and leisure companies, highlighting issues and using analysis to drive revenue per labour hour by improving sales at peak times and identifying and eradicating wasted labour hours during quieter periods.

“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.”