Blog: Hospitality Industry Wages Already Outstripping the New National Living Wage Thresholds
The latest statistics from Fourth, the leading global software provider for the leisure and hospitality industries, has revealed that the average hourly pay of workers over 25 in the UK hospitality industry is currently £8.60 – 39p above the new £8.21 threshold for over 25s outlined in the budget.
The statistics, which have been mined from Fourth Analytics data on the hourly pay of thousands of hospitality workers and is blended across the restaurant, QSR and pub sectors, also reveals that all age cohorts are currently earning higher than their respective new thresholds, which come into force in April 2019.
The average pay of those aged between 21-24 is £8.35 (Sept 2018) – 65p higher than the new threshold of £7.70.
The average pay of those aged between 18-20 is £7.37 (Sept 2018) – £1.22 higher than the new threshold of £6.15.
The average pay for those under 18 sits at £6.52 (Sept 2018) - £2.32 higher than the new threshold of £4.35.
Commenting on the figures, Mike Shipley, Analytics & Insight Solutions Director at Fourth, said:
“These statistics clearly reveal that hourly pay in the hospitality industry is currently significantly outstripping increases to the National Living Wage. Considering hourly wages of hospitality workers increased by 4.8% over the last six months, it’s likely the gap between real wages and the new thresholds will be further exacerbated between now and April.
“Attracting and retaining quality employees is one of the biggest challenges hospitality operators now face and with a well-documented shortage of labour, particularly in skilled back-of-house roles, operators are offering competitive rates, alongside development programmes, incentives and other initiatives to attract the best employees, which are all driving up costs.
“To combat this era of aggressive labour inflation, we are working closely with our customers on productivity programmes and initiatives, such as smarter rota scheduling to improve both sales and service levels, as well as driving the amount of revenue generated per worker per labour hour.”
Digging deeper, the statistics reveal that EU workers’ average hourly wage is higher than workers from the UK, but lower than those from the rest of the world (ROW). Over the period March 2018 to September 2018, EU workers’ wages rose 5.2% from £8.08 to £8.50; while UK workers’ wages rose 5% from £7.73 to £8.12; and ROW workers’ wages rose 4.2% from £8.52 to £8.86.
Analysing wage levels by sector, the results show that workers in quick service restaurants receive the highest hourly wage, which rose 4.7% from £8.80 in March 2018 to £9.08 in September 2018. Over the same period, pub workers’ wages rose 5.6% from £7.98 to £8.43; while restaurant workers experienced a 4.7% increase from £7.89 to £8.26.
The data also reveals that front of house (FOH) workers received a higher percentage increase in wages (5.2%) than those working in back of house (BOH) roles (5%). However, they still earn a lower hourly rate of £8.05 than BOH workers who earn £8.75.
Shipley added: “While the statistics reveal that EU and ROW workers earn more than workers from the UK, the large numbers of EU and ROW workers in skilled back of house chef roles in the quick service and restaurant industries has significantly driven up their average wage per hour, particularly with the ROW where a number of specialist overseas chefs command higher wages, impacting the figures.
“With our industry’s heavy reliance on skilled workers from the EU, a reduction in the supply of labour from these countries – which we are already experiencing with new EU workers entering the industry decreasing by 3% to 38% of all new starters over the past year – will continue to drive up wage inflation, further impacting hospitality margins.
“To mitigate this, we are increasingly seeing companies turn to technology to gain greater transparency on all aspects of their business, including the make-up of workforce, in addition to improving efficiency through smarter scheduling and forecasting.”