Foodservice operators could face an increase of over £100,000 in workforce costs by 2020 as a result of increases to Living Wage, National Wage and pension contributions, a new report has claimed.
Combined with rising food inflation, a potential reduction in the size of the labour market and business rate increases, Tahola, a business analytics provider, is urging the hospitality sector to be mindful of the unprecedented macro-economic impacts set to hit operators over the coming years.
As of today, the National Living Wage increases for over 25’s from £7.05 to £7.50 per hour. The government’s ambition is to increase this figure to £9 by 2020, and there is further demand to extend this increase to under 25s, which would entail an annual increase of £100,912.50 for operators with 30 full-time staff.
Whilst most operators are prepared for the step change in April, the longer term view of legislative wage increases are harder to get a grip on. And, it’s not just wage increases that will hit operators, the planned increases in employer pension contributions from 1% to 3% by 2019, mean yet even more cost will be levied on operators.
Simon Blackbourne, co-founder and commercial director of Tahola, commented: “Based on an operator with 30 full time staff receiving the new National Living Wage of £9 per hour and a 3% employer pension contribution, our data mixologists have identified that annual pension costs alone could be set to rise an additional £8,900 per year – combining this cost with increased wages could amount to a staggering additional cost of over £109,000 by 2020*.
“The hospitality industry can be wildly unpredictable, and Brexit is only compounding the sectors sense of uncertainty when it comes to changes in Government legislation. Just looking at the labour cost changes we already know about, there’s a strong indication that the cost of a full-time employee could rise significantly in the near future.
“Despite this, there are ways for operators to get a firmer grip on labour costs and mitigate some of the macro-economic risks using their own data in smart ways. We’ve developed a state-of-the-art predictive analytics service for the hospitality sector through an exclusive partnership with SAS, the world’s largest independent software company. This means instead of looking backwards to see what has happened, operators can look forwards and gain invaluable insight into how future changes will impact their business, meaning they can take action quickly to turn risk in to opportunity.”