Licensees split over minimum wage rise

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Over 40 per cent of licensees believe that the 30p an hour increase in the minimum wage will not affect their businesses, according to a poll on...

Over 40 per cent of licensees believe that the 30p an hour increase in the minimum wage will not affect their businesses, according to a poll on thePublican.com.

The new minimum rate agreed by the government of £4.50 an hour will come into force in October. This will be followed by an increase of £4.85 an hour in October 2004 - a rise of 15 per cent over two years.

The move sparked outrage from some in the industry who believe licensees will be faced with a huge salary bill.

Along with a rise in National Insurance contributions from 10 per cent to 11 per cent, which begins on April 6, they argued it will restrict growth, put more financial burdens on licensees and may even force some out of business.

Results of the poll at the time of writing reveal that around 60 per cent of licensees believe it will affect the profitability of their businesses but they do not think the impact will be as severe as some in the trade predicted last week. Over a third, 35 per cent, believe that the new minimum wage will see profits drop by one to 10 per cent, while 15 per cent say the new wage will mean a drop in profits of between 11 to 20 per cent.

Licensee Mark Dodds, of the Sun and Doves in Camberwell, London, says his pub will not be affected by the move. He said: "My feeling is that people should be paid a better wage - I choose to pay people better. We pay £5 an hour to start with and this is the lowest paid glasswasher."

But licensee John Hudson, president of the Federation of Licensed Victuallers' Associations who runs the Crossways Hotel in Durham, is considering cutting staff. He said: "Our wages bill is creeping up. I would like to give all my staff £10 an hour - they deserve it. But I am now having to reduce staff levels and employ more part-timers to reduce national insurance levels."

While the trade has debated the impact of the rise the Trade Union Congress (TUC) has expressed its disappointment. It wants the minimum wage to rise to between £5 and £5.30 per hour by October 2004.

How you've voted so far

We asked: how much do you think profits will drop when the minimum wage rises to £4.50? This is how you've voted so far:
None at all: 41 per cent
1 to 10 per cent: 35 per cent
11 to 20 per cent: 15 per cent
21 to 50 per cent: 5 per cent
51 per cent plus: 4 per cent
There's still time to cast your vote - click here.

Related articles:

Minimum wage hike sparks trade fury (20 March 2003)