MINIMUM WAGE: STOP RIGHT NOW

Pub employers are calling for an end to spiralling national minimum wage (NMW) increases.

Staffing levels at half of all pubs have already been cut as a result of recent increases. And the threat of a £6 minimum wage - as demanded by unions - "could spell disaster," says the Association of Licensed Multiple Retailers.

Those are the findings of a survey of 21 ALMR members, between them operating just under 1,000 pubs.

The survey - presented to the Low Pay Commission, which is reviewing minimum wages for 2007 and 2008 - revealed that employment costs have increased from 20% to 25% of turnover since the minimum wage was last reviewed two years ago. As a result, 84% of operators said profits had been hit.

ALMR recommended that the minimum wage, which has increased by 50% in seven years, should now only rise in line with inflation.

The minimum wage is to rise from £5.05 an hour to £5.35 next month.

ALMR chief executive Nick Bish said: "The situation is already critical for many businesses and a further large increase at this time would be impossible to manage.

"We know that the unions are pressing for £6 an hour, but that would see the wages bill for the sector soar.

"When Government proposals to increase paid leave are also taken into account, we estimate that gross employment costs will be more than 30% of turnover - that is simply unsustainable."

Phil Thorley, MD of Kent-based Thorley Taverns, said minimum wage hikes have a knock-on effect on salaries for more senior staff, who want to ensure price differentials remain in place.

He said increases in the minimum wage were bound to force operators to reduce staffing levels and investment.

"When the national minimum wage started it affected small operators in some areas but now it's started to affect everybody," said Thorley.

Peter Linacre, MD of London-based Massive, questioned the logic of a blanket minimum wage that does not take into account wages and living costs.

ALMR survey findings:

l Just under 50% had reduced staffing levels as a result of the minimum wage

l Gross employment costs account for 25% of total turnover, compared to 20% in 2004

l 84% said complying with the minimum wage hit profits

l 90% had increased prices for consumers in order to comply with the national minimum wage

l Just under half would cut staff to deal with increasing costs - less than one third would do so in 2004

l Just under one in four use cheaper staff and 40% employ migrant workers