Hospitality workers paid higher than mandatory living wage

The average pay of a hospitality worker over 25 in June 2016 was £7.47 – 27p higher than the mandatory living wage which was introduced in April this year.

That’s according to data from Fourth Analytics, which looked at the hourly rates for thousands of workers across 4,000 hospitality businesses.

It found, since the introduction of the National Living Wage (NLW), the regional pay gap between London and areas north of the M25 has narrowed from 25p in 2014 to 2015 to just 10p in 2016.

Consequently, companies with operations outside of London have seen staffing costs rise more sharply, placing pressure on operating margins.

Furthermore, with the Living Wage Foundation indicating the need for a £1.15 London to regional pay gap, Fourth Analysts said the current position may no longer “remain tenable moving forwards”, causing London wages to rise, adding further pressure on companies.

The report claimed recent comments from a number of large pub companies, has indicated that advanced labour productivity software has helped them offset the impact of the NLW’s introduction and improve labour efficiency.

Other contributing factors include the flexible shift patterns of pub workers and the fact that under 21’s – who currently do not qualify for the NLW – make up 20% of the pub sector’s workforce, twice as many as the hotel, restaurant and quick-service sectors.

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The figures also reveal:

• Gender differentials, with men being paid an average of £7.53 (in 2016), which is 1.9% more than women, who are paid £7.40, on average. This 1.9% pay gap between men and women in 2016 has remained the same from 2015, which was down from 3% in 2014.
• In 2016, the sector with the largest gender pay gap in favour of men is restaurants. Additional demographic data shows that males make up over 75% of chefs and kitchen staff, so this slight imbalance can be attributed to employers compensating back-of-house staff for a lack of opportunity to earn tips with inflated wages, thus skewing the figures.
• The second largest gender pay gap can be found in pubs and bars, followed by quick service restaurants with a minimal pay gap. Conversely women in the hotel sector, where there are substantially more job roles are paid an average of 26p more per hour than men.
• Based on purely historical statistical trends, the actual average hourly wage could rise to as much as £9.45 by 2020 – 45p higher than the planned £9 (the new rate by 2020).
• Average hourly rate for over-25s as of October 2015 (prior to national living wage announcement) was £7.04.

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Mike Shipley, analytics and insight solutions director at Fourth, said: “Our figures indicate that, with the exception of pubs, the industry is continuing to pay a premium wage above the living wage to attract high-quality staff.”