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Sadiq Khan's announcement last week that the London Living Wage will rise to £9.75 has been met with concern by many London hospitality operators. The declaration arrived just after predictions that London pubs could face a 40% business rate increase over the next 5 years, leaving many in the industry concerned about their financial future.
The Living Wage is a voluntary commitment, but growing numbers of businesses are signing up, with almost 3000 companies pledging to abide by the rates. Hospitality and other customer-service focused industries have been slower to adopt the Living Wage than some others, perhaps due to their larger-than-average number of young or entry level employees. However, recent revelations that 63% of hospitality workers aren't being paid a living wage has resulted in an increased pressure on the industry to act.
There are definite benefits to paying employees a higher wage, in both recruitment of new staff and the engagement of existing team members. IKEA reported that they've seen a reduction in staff turnover and staff absence, and a rise in the quality and quantity of job applicants since adopting the Living Wage for their staff. When the Living Wage Law was introduced last year, many operators feared that it would deeply cut into profits... but as we reported, after a few months the effects were largely unnoticed. It's popular with guests too; in 2015, it was revealed that 75% of people think companies should disclose whether they pay the Living Wage, and 87% think that a company should pay it if they can.
The Living Wage isn't an option for every London operator, and employers must decide for themselves whether the Living Wage is something they can offer their staff. To avoid losing potential team members to other companies, those unable to guarantee the voluntary Living Wage for their employees should remember that wage isn't the only (or even the strongest) motivator for staff engagement. Focus on the other benefits that you can provide, such as performance rewards or training and career development, to encourage your team to be as invested in your brand as you are in them.
