Nothing to fear from Living Wage

Peter Borg-Neal 1By Peter Borg-Neal, Chief Executive, Oakman Inns

My first reaction to the recent Budget was to say that it would be very disappointing if the main post-Budget focus for our sector turned out to be the introduction of the compulsory National Living Wage (NLW).

My feeling was that such a reaction would be a massive own goal for our sector. We need more and more talented people to want to join our industry. Paying more is part of what we need to do to attract people. But even more important is the perception young people have of the hospitality industry. If the perception is that this increase in the NLW is begrudgingly paid then the sector will have better remunerated team members but, because of that attitude, there will be no increase in engagement and satisfaction – which I believe is worth more than 50p an hour.

Unfortunately, that is what has happened with several operators claiming that it will be hugely damaging for their business. Personally, I think they have this horribly wrong – from either a logical, ethical or commercial point of view.

For a start it is entirely ridiculous that some employers see the Living Wage as some modern scourge that hurts free enterprise. In fact it has been around a lot longer than people realise. It was in 1909 that none other than Winston Churchill introduced Britain’s first legislation mandating minimum salaries, making it clear that they should be enough to live on. He said at the time: “It is a serious national evil that any class of His Majesty’s subjects should receive less than a living wage in return for their utmost exertions”? Quite right sir!

To me it is morally reprehensible for someone to work full-time for a salary that cannot support a ‘reasonable’ level of independent living. The government’s target is for the NLW to climb to 60% of median earnings by 2020. That is a reasonable, and achievable, basic target. At Oakman Inns we will go further and will be considering the NLW as simply a new tier of the Minimum Wage. We have already taken the decision to continue to refer to the living wage set out by the Living Wage Foundation. Accordingly, we will ensure that everyone who has been through the first few stages of our ‘Oakmanology’ training with us will be earning £7.85 per hour or more and that target will be lifted annually.

So that deals with the logical and the ethical arguments. I firmly believe that the commercial argument is also powerful. Well trained, highly engaged people will be more productive, will do more to delight customers and will be less likely to leave. All of these things will help with profitability. Furthermore, the NLW in combination with the rise in the lower tax threshold means that younger workers across the country will have a little more disposal income – which it is great news for our sector.

I would hope that most SRA members would be happy to rely on the ethical argument. Regardless, I hope the commercial arguments provide cheer for those who harbour any concerns. My message is that high quality operators who value their people have nothing to fear from these reforms.


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