Fair wage rates can lead to even higher standards in the hotel sector

David Punter, Business Development Director at London specialists in quality cleaning, Julius Rutherfoord, outlines the impact of wage increases in the hotel sector.

The introduction of what the government is calling a national living wage was announced in the 2015 Budget, in July. This new wage increase is legally enforceable and will affect all workers over 25. Effectively replacing current minimum wage rates, it will start at £7.20 an hour from April 2016 and is set to rise to £9.00 by 2020. It will give an estimated 2.5 million people an average £5,000 rise over five years. Those under 25 will not be affected by the wage increases.

Understandably, there are concerns in the hospitality industry over the decision to introduce a national living wage set by government.  This is primarily because this sector accounts for a large proportion of people currently earning the minimum wage. Similar concerns were expressed when the National Minimum Wage was first introduced in 1999, with some businesses feeling that they wouldn’t be able to manage the wage increase.

However, although some businesses are apprehensive about the new rate and its impact on their bottom line, there is ample evidence to suggest clear benefits, from higher staff retention rates and higher productivity.

Uncertainty amongst employers about the implications of wage increases hasn’t stopped over 2,000 organisations taking fair wages a step further, by becoming accredited as Living Wage employers. This voluntary scheme, organised by the Living Wage Foundation, campaigns for the Living Wage, which is calculated according to the amount a worker needs to earn to lead a decent life and cover the basic costs of living.

The Living Wage Foundation recently announced its new Living Wage rates for London and the UK, which are significantly higher than the current national minimum wage of £6.70. Accredited Living Wage employers will now pay their staff a minimum of £8.25 an hour, rising from the previous rate of £7.25 an hour. The London Living Wage, a separate rate weighted for those working in the capital, has risen by 25p to £9.40 an hour. This reflects the inherent additional costs associated with living and working in London.

Some advantages of a fairer wage

High standards are required to enhance consumer confidence and business sentiment in the hotel market to ensure customers receive the very best service.

According to Trust for London (a charitable organisation that exists to reduce poverty and inequality in London):

• Over half of those in Living Wage workplaces (54%) felt more positive about their employment once it was introduced. A similar number (52%) felt more loyal towards their employer.
• Improved productivity, resulting from a fairer wage, could more than cancel out the increase in wages.
• Employers saved money by reducing staff turnover rates (by as much as 25%) and lowering levels of staff sickness.
• As the changes will put more money into the pockets of consumers, businesses may well see their profits go up. Almost 4 in 10 (38%) workers reported financial benefits such as being able to buy more goods and services and save more, which is great news for the hospitality and leisure sector in particular.
• In addition, companies have also noted the reputational benefits of paying the Living Wage helped them attract new business and customers.

My own organisation is a Living Wage Recognised Service Provider, which has committed to paying the London Living Wage to all our direct employees, as well as actively encouraging all clients to adopt this rate for the cleaners on their contracts.

Enabling all staff who work in the hotel sector to believe in their professionalism and developing their customer service skills, starts with treating them well by providing them with a fair day’s pay for a fair day’s work, alongside industry recognised training

www.julius-r.co.uk

Published on Hotel Business Website