A government plan to increase the National Living Wage (NLW) to £10.50 by 2024 has received a mixed response.
The Resolution Foundation think-tank welcomed the “hugely ambitious plan” to eliminate low pay; however UKHospitality argued the increase would hit sector margins and damage jobs.
The pledge to increase the NLW to reach two-thirds of typical hourly pay was one of the standout policies announced at this week’s Conservative Party conference.
Chancellor Sajid Javid said it was “important that we support young people starting to build a life for themselves”. He also announced that the NLW will be extended to 23-year olds from 2021 and 21-year olds within five years.
The foodservice and hospitality sector has a high proportion of workers who are paid the current NLW of £8.21 for those 25 and over and £7.70 for 21 to 24-year olds.
The Resolution Foundation said the proposal would give “a major pay boost to many young workers”. Its economic analyst Nye Cominetti called on the chancellor to “match his boldness with a measured approach towards hitting his goal, by closely involving the Low Pay Commission”.
The call to involve the Low Pay Commission, the independent body that advises the government about the NLW, was echoed by UKHospitality chief executive Kate Nicholls, who warned that the announcement “threatens a double whammy of a further unprecedented cost increase for employers and an adjustment down in terms of age”.
Nicholls added: “Hospitality is keen to attract British talent and part of that process will be to raise entry level wages. However, the cumulative costs of regulation and taxes over the past three years have wiped a third off the margins of hospitality businesses and this move, if marshalled in too quickly, will hurt business, damage jobs and not just stifle growth but reverse it.”