GEORGE OSBORNE used the first Conservative budget in 20 years to introduce a new national living wage. Starting next April at £7.20, it will rise to £9 by 2020.
Osborne said companies should be able to afford the cost of the living wage because of cuts to corporation tax, which will drop to 18% from 20%.
Expected to benefit 6 million workers, the announcement was greeted with cheers from Conservative benches.
The foodservice industry’s response was more mixed however, with the British Hospitality Association announcing they are “rather cross”. Ufi Ibrahim, chief executive, said: “As an industry employing a large number of individuals earning more than national minimum wage and less than the proposed living wage, we have tried to have a constructive dialogue with HM Treasury on building towards the living wage without job losses. We were very surprised the Chancellor made this announcement without consultation.”
The industry’s concern is that increased employment costs in the food service industry could lead to job losses.
“We have to have a balanced debate,” commented Charles Miers, managing director of Footprint. “It only seems right that employees of the foodservice and hospitality sectors are paid the living wage. There are ways that it can be built into business models. Contract caterers and service providers could submit two tenders; one with the living wage and one without. Sodexo are already doing this (see Foodservice footprint pg 11). Casual dining operators could use it as a competitive advantage; consumers are demanding social responsibility as much as they are environmental sustainability. We can only congratulate the government for taking an issue of such social significance head on.”