National Living Wage

Hourly pay in hospitality industry above national living wage

By Sara Hussein

- Last updated on GMT

Survey results: hospitality wages 'higher than NLW'
Survey results: hospitality wages 'higher than NLW'

Related tags: Minimum wage

Thousands of workers in the UK hospitality industry are being paid more than the national living wage (NLW), according to a new study. 

According to data agency Fourth Analytics, the average hourly pay rate for workers in the trade, including workers under 21 and those aged between 21 and 24, is £7.71 an hour after rising by 12.6% since 2014. 

Excluding under-21s, the average hourly pay rate in the hospitality industry hit £7.92, 72p higher than the NLW at £7.20.

Analytic and insight solutions director at Fourth Analytics, Mike Shipley, said: “What’s particularly striking is that the under-21s are catching up fast, earning on average £1.53, or 29%, above the legal minimum rate. 

“This could be driven by wage parity policies, and also general competitive pressure for good people.”  

‘Racing’ ahead

Since the NLW was introduced in April 2016 by former Chancellor of the Exchequer George Osbourne, many pubs have reported reduced profits​ and fear that wages could rise to £9 by 2020. There will be further increases to the NLW in April 2017.

Pay by Age

National living wage rates by age

  • 25 years and over:​ £7.20
  • 21-24:​ £6.95
  • 18-20:​ £5.55
  • 16-17:​ £4.00
  • Apprentices aged 19 or under:​ £3.40 

Shipley added: “With actual pay significantly outstripping the legal minimum for all age thresholds, businesses are clearly experiencing very strong employment-cost inflation.

“Clearly it is difficult to predict whether this momentum will continue but there’s no sign of a levelling off at the moment.

“We expect to see the hourly rate average in hospitality hitting £8 in January 2017, and we could well see average rates approaching £8.50 by April 2017 – when the next incremental increase comes into force.

“This could see the minimum legal living wage (for over-25s) move up to between £7.50 and £7.65.”

Pay gaps and productivity

While the latest figures show the gender pay gap has ‘completely disappeared’, the regional pay gap between London and other areas beyond the M25 has also narrowed since the introduction of the NLW. The gap shrank from 25p in 2014-2015 to 11p in October 2016.

Shipley commented: “It is clear that many of our clients are engaged in productivity programmes and initiatives, such as smarter rota scheduling and driving the amount of revenue taken per worker, per labour hour. 

“It is one of the key ways that hospitality and leisure companies can combat this era of aggressive labour inflation.”

Related topics: Legislation

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