The boss of a leading recruitment agency for the food and drink/hospitality/cleaning industry has warned the sector that it needs to prepare for the impact of the new, compulsory National Living Wage.
Derek Ferrol, from Glasgow-based EasyRecruitUK, issued the note of caution just five months ahead of its introduction in April 2016. It will be paid to workers aged 25 and above and will initially be set at £7.20 an hour but is expected to exceed £9 an hour by 2020.
It is expected to boost the wages of 6m people but The Office for Budget Responsibility has predicted that 60,000 people will lose their jobs as a result of the changes.
Mr Ferrol said: “The impact of the National Living Wage could take us back to the dark days of the 1970s and 1980s. As the unions pushed for improved working conditions and better pay, the UK struggled to perform in the global manufacturing market. The foundation of any sustainable business, quiet simply, requires a flexible cost base. One that is not fixed, rigid or beyond the control of the business.
“I have no doubt that many businesses will consider the option to reposition their operations outside the UK, not because they can not afford to pay the National Living Wage, but because losing control of labour costs makes their business unsustainable.”
However, there was a note of optimism among the doom and gloom.
He added: “The sectors which will be most affected by this legislative change are food and drink, hospitality and cleaning. In order to limit the impact of the National Living Wage, they need to consider moving to a ‘flexible labour’ model. Not only will greater flexibility make an organisation more resilient and progressive in challenging times, but it will also make you a better employer.”
From April 2016, workers over 25, who are currently on the national minimum wage, will get 70p an hour more than the current rate.
By 2020, someone aged over 25, working 35 hours a week and previously earning a minimum wage of £6.70, will see their wages go up by around £4,000 a year.