LPC Must Act With Caution Over Future Wage Rates

The ALMR has urged the Low Pay Commission to show caution on future upratings of National Living Wage and National Minimum Wage rates.

The ALMR has submitted to the Low Pay Commission’s consultation on wage rates highlighting recent cost increases for businesses, tightening margins and continued political instability as reasons to avoid significant cost increases that could undermine investment.

ALMR Chief Executive Kate Nicholls said: “We are seeing unprecedented cost pressures eroding eating and drinking out margins, and significant increases could threaten investment and put jobs at risk.

“Employers have already had to swallow a significant wall of costs in the form of recent wage increases and continually mounting property costs. Any considerable wage increases could seriously limit the sector’s ability to invest in sustained job creation, training and growth.

“Research by the ALMR and Ernst and Young forecasts the sector to be contributing £166bn GVA by 2020, providing an additional 19,000 jobs and contributing an additional £50bn to economic turnover. That potential investment may be threatened by additional costs to employment. ALMR research shows that the cost of the introduction of the National living Wage on the hospitality sector could be over £1bn.

“Businesses in the sector are committed to developing their workforces, but recent increases in wage rates have not led to increased spend at tills for businesses. Some employers have had to adjust the number of hours they offer staff as a result of increased wages.

“With uncertainty around Brexit providing only instability for businesses, now would not be the time to drastically increase wage rates. The Low Pay Commission should act with care if it wishes to avoid risking future investment and jobs in the UK.”