Living wage or just a new minimum wage?

The past few years has seen the scrapping of the duty escalator, and cuts on duty for beer — however, while those reductions have been widely, and rapturously, received by the trade, the recent announcement of an increase to the minimum wage — in Government terms, a ‘living wage’ — has pulled the rug out from under most.

The increase in wages proposed by the government will more than offset any gains made by the duty cuts, leaving hard-pressed pubs looking for other ways to absorb those
cost increases.

This is a tricky one, as there’s a clear need for people to earn a fair wage, and I’m a keen supporter of the pub sector being a beacon as a good employer that pays good wages. If we want to recruit and retain the brightest people in a very competitive labour market, good wages are a part of that (not all of it, but certainly a factor).

However, is legislation the right way forward?

I would suggest perhaps not and would argue that the Government appropriation of the term living wage is disingenuous.

What they have effectively done is raise the national minimum wage. This, in turn, will have a knock-on effect to businesses throughout the UK, increasing costs, and, as a result, will ultimately lead to higher prices to the end consumer.

As cause equals effect, the proposed living wage will once again become the basic minimum wage, and companies looking to offer more and retain their staff will be once again be forced to pay a premium above and beyond the Government level to attract and retain good staff — thereby creating a new living wage!

As I’ve said, I’m a supporter of anything that helps improve our trade’s image as a good employer and a good place for a career. Being able to offer good money, where possible, above the bare minimum is one area in which we can do that, but I would argue it needs to be a business-based decision, not an arbitrary blanket imposition from the Government.

Businesses should be free to set their wages themselves, above a basic minimum, and Government should be honest about what it is doing. Calling an increase to the minimum wage a living wage is simply playing politics to try and put a cuddly spin on something that is designed to garner public support.

I’d much rather the trade had its freedom to show its true colours as a great employer, offering great opportunities, great training, and great wages, free from government interference.