Price rises and jobs losses warning as hospitality industry struggles to afford National Living Wage

Beacon, Britain’s leading purchasing company, is calling on the Government to look again at easing pressure on the hospitality industry as a new survey shows price rises and job losses are likely as a result of the National Living Wage. – News from Beacon

The survey was conducted by Beacon’s sister organisation, Best Western GB, which currently accounts for 15% of the company’s customer base. It reveals that over 90% of respondents will have to increase their prices to mitigate the increase to staff salaries, 43% said they would have to reduce their workforce as a result of the changes and 80% said they would rethink recruitment.

Rob Payne, CEO of Beacon and Best Western Great Britain said: “While we are in favour of a fair wage for everyone, our members are telling us that they are worried about job losses, price rises and recruitment and investment strategies as a result of the National Living Wage.

“We are working hard to help all those hotels and businesses we represent to navigate the impact of the National Living Wage. We are doing all that we can to drive down costs for goods and services with collective buying through Beacon and gaining economies of scale for customer acquisition and distribution via Best Western GB – but we know more needs to be done. My worry is for those independent businesses that are not able to benefit from similar levels of support from organisations such as ourselves.

“The bigger picture here is that this will impact every café, every bed and breakfast, every visitor attraction and every pub, with potentially damaging consequences for investment in the British hospitality industry.”

The National Living Wage, which the Government has set at £7.20 per hour for all staff over 25 years of age increasing to £9 by 2020, will come into effect across the whole of the UK from April 2016. The Office for Budget Responsibility (OBR) estimated the plan to increase the minimum wage would cost only 60,000 jobs and create 1 million jobs.

Payne added: “My fear is that the 60,000 jobs the OBR identified as being at risk will be disproportionately distributed among small and medium sized hospitality businesses, those least likely to be able to simply absorb the costs. As a business, we are working alongside industry bodies to lobby the Government for change. I would urge the Government to do all it can at this time to help ease the pressure of the living wage in the hospitality industry elsewhere by looking again at reducing Tourism VAT, make the issue of rate parity a priority bringing us in line with our European businesses and reducing the regulation burden. Without this support I am concerned that the hospitality industry could pay a higher price for the introduction of the new National Living Wage.”

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