Call 020 7819 6700

Fresh thinking in cleaningTM

Julius Rutherfoord - specialist contract cleaners for London

News

How The New National Living Wage Will Impact Those In Hospitality & Leisure

< Back to Blog

How The New National Living Wage Will Impact Those In Hospitality & Leisure

22-Sep-2015
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 5.00 out of 5)
Loading...

How The New National Living Wage Will Impact Those In Hospitality & Leisure

Our specialist cleaners have been providing cleaning services to London’s hospitality and leisure industry for over twenty years. As a result, we have in-depth knowledge about the high standards that are required to enhance consumer confidence and business sentiment, and offer a wide range of five-star services to ensure our clients (and their customers) receive the very best.

In this post, we offer more information about the new UK living wage, highlight concerns about its implementation, and in particular, discuss how it will impact employers and staff in the hospitality and leisure sector.

Contents:

  1. What Is The National Living Wage And How Does It Differ From The National Minimum Wage?
  2. How The Living Wage Will Impact The Hospitality And Leisure Sector
  3. Some Advantages Of A Fairer Wage
  4. Julius Rutherfoord: A Fair Specialist Cleaning Company For London

What Is The National Living Wage And How Does It Differ From The National Minimum Wage?

The National Minimum Wage was a key policy for the Labour Party in the 1997 election, and an important part of legislation in 1998. The act, which first came into force on 1st April 1999, set a legal minimum wage for workers, with a goal to help reduce relative poverty in the UK.

Currently, the minimum wage is £6.50, which is set to increase in October 2015 to £6.70.

The living wage, as promoted by the Living Wage Foundation, is not legally enforceable, unlike like the National Minimum Wage; rather it is a suggested (voluntary) pay rate for employers to consider, based on the amount a worker needs to earn to lead a decent life and cover the basic costs of living.

According to Living Wage Foundation (which is independent of the government), the current UK living wage is £7.85 an hour, except for those living in London where it is £9.15 an hour. This is calculated according to the cost of living.

However, the National Living Wage, as set by the Chancellor of Exchequer, George Osborne in July 2015, is different to the one detailed above. This is calculated on median earnings throughout the UK, rather than the cost of living. This new National Living Wage will effectively replace current minimum wage rates in April 2016, and is legally enforceable. It will start at £7.20 and rise to £9.00 by 2020.

The new wage increase won’t be for all low paid workers, only those over 25. Gillian Owen, from the Living Wage Foundation, said: “In essence this is a huge pay rise for millions of people and that’s fantastic. [However,] we don’t believe that because you’re 24 your bills, your transport, your living expenses are any different to people who’re 25.”

David McCorquodale, head of retail at KPMG, warned, “[employers] will find ways of mitigating the negatives they have been given”; some “may halt employee benefits such as paid lunch hours and paid holidays”.

Clearly there’s uncertainty amongst employers about the implications of the new wage increase, but that hasn’t stop over 1700 employers (view the complete list of Living Wage Employers here) pledging to pay the living wage as put forward by the Living Wage Foundation. But how will it affect those in hospitality and leisure?

How The Living Wage Will Impact The Hospitality And Leisure Sector

Understandably, there are concerns in the hospitality and leisure industry over the decision to introduce a national living wage, primarily because this sector accounts for a large proportion of low-paid roles. The director general of CBI (Confederation of British Industry), speaking at an event at King’s College London, commented:

“I’ve talked to many CEOs who feel they may now have to make changes to their business models, which could result in fewer job and progression opportunities”.

Fears that a living wage will push up costs for consumers, force job cuts and mark the end of businesses up and down the country will come as no surprise, but it’s not all bad news.

The introduction of the National Minimum Wage in 1999 was slammed by businesses across the UK who felt that they couldn’t manage the wage increase then. Whilst 2016’s wage increase will inevitably result in closures, especially in poorer rural areas, there are benefits of paying a living wage to employees.

Some Advantages Of A Fairer Wage

  • According to Trust for London (a charitable organisation that exists to reduce poverty and inequality in London), over half of those in Living Wage workplaces (54%) felt more positive about their employment once it was introduced. 32% also felt it enriched their family life do allowing them to do more things.
  • Improved productivity, resulting from a fairer wage, could more than cancel out the increase in wages.
  • A similar number (52%) felt more loyal towards their employer.
  • Employers saved money by reducing staff turnover rates (by as much as 25%) and lowering levels of staff sickness.
  • As the changes will put more money into the pockets of consumers, businesses may well see their profits go up. Almost 4 in 10 (38%) workers reported financial benefits such as being able to buy more goods and services and save more, which is great news for the hospitality and leisure sector in particular.
  • In addition, companies have also noted the reputational benefits of paying the LW helped them attract new business and customers.

Julius Rutherfoord: A Responsible Specialist Cleaning Company In London

As a cleaning company that is very much aware of the costs of living in London, we have always paid our cleaners above the minimum wage. In addition, we invest heavily on staff training and the latest cleaning technology and solutions to ensure that each Julius Rutherfoord staff member is able to meet our impeccable standards.

If you would like more information about any of our cleaning services for London, you can browse our website or visit our blog which is frequently updated with related posts! Alternatively, you can follow us on Twitter @J_Rutherfoord, or get in touch directly to discuss your individual requirements. Call 020 7819 6700 to speak with an advisor, or email us at info@julius-r.co.uk!

Julius Rutherfoord