ALMR warns wage increases must be sustainable for industry

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The ALMR has argued that any increases to the rates of National Minimum Wage must remain sustainable to allow hospitality businesses the opportunity to continue investing in their staff.

Last week, the ALMR submitted its response to the Low Pay Commission’s consultation on the National Minimum Wage and National Living Wage arguing for affordability and stability for businesses.

ALMR chief executive Kate Nicholls, said: “Our submission has stressed the importance of controlled increases to wage rates to ensure that businesses are able to sustain the increased outgoings.

“Research carried out amongst the ALMR’s membership shows 62% of businesses facing reduced profit margins due to increases in statutory pay levels and large-scale increases will continue to eat into margins.

“This erosion could curtail the sector’s ability to maintain the current level of investment in new openings, urban regeneration and job creation.

“The licensed hospitality sector has seen above-inflation wage increases over the last year and the ALMR’s submission to the Low Pay Commission has highlighted this fact.

“The average hourly rate of pay in licensed hospitality in 2015 is £6.78 – and that was before the October increase took effect.

“But 25% of companies were reporting an average hourly rate of pay for bar staff of  more than £7, demonstrating that companies can and will invest in their staff when the economic climate is right and that is affordable.

“There is no doubt, however, that a second increase within 6 months will be challenging for some companies in the sector, with many reporting that they do not yet feel confident to put up prices to cover that.

“Our survey showed that operators believe it will increase payroll costs by roughly 11% with a commensurate reduction in hours offered of 11.5%.

“We have therefore urged the Low Pay Commission to proceed with caution in setting NMW rates for October 2016 and to do  so taking account of the as yet uncertain consequences of the introduction of the NLW – an unprecedented intervention in the labour market.

“We also urge the LPC and the Government to move to a single date for NMW and NLW changes, with all rates being reviewed in April 2017. This will help  to ease the burdens on businesses and ensure continued investment in staff.

“We have also urged the Low Pay Commission to provide indicative future rates to offer businesses an additional level of stability.”

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