Through inflation the cost of living has experienced staggering increases since early 2021. Rising bills and day-to-day spending have impacted both the hospitality workforce and businesses across the sector. Inflation creates a vicious spiral for all, with demand for salary increases putting an ever-larger need to inflate prices to maintain profits. The secondary problem that inflation brings is pressure on discretionary spend. In markets where there is already financial strain and because of inflation reduced demand it is often not possible to pass on such wage cost rises to the consumer. In April 2022, inflation reached its highest recorded level since 1982. The hospitality industry already has a staffing crisis, low cash reserves due to Covid combined with the likelihood of reduced consumer confidence and demand many businesses are at a crossroads with no clear direction or support for what to do next.
National Living Wage and Salary Bandings
From April 1st, those working on minimum wage experienced a rise in line with the rising cost of living and increased National Living Wage (NLW). Overall, hospitality wages saw a 7.7% average increase between March 2021 and March 2022, partly due to NLW increasing by 6.6% this year.
According to a recent survey, the average salary within Hospitality and Leisure is £21,862 with an expected range between £18,000 and £30,999. That said, businesses are encouraged to offer salaries above statutory minimums whenever possible and affordable for the business and this involves even those not on minimum wage. Even if the NLW and minimum wage increase doesn’t directly impact a person’s salary, salary bandings across the business should be reviewed in line with the rising cost of living and adjusted accordingly.
Despite improvements being made regarding banning zero-hour contracts, pay rates remain a significant barrier according to Dr Alicja Bobek, a post-doctoral researcher and are contributing to an already challenging staffing crisis.
Inflation and Staff Retention
The pandemic brought about huge change for workers within the hospitality sector and staff found themselves exploring new career prospects, resulting in few choosing to return to the hospitality industry post-covid. During current times, when quality employees are hard to come by, staff retention has become even more important than ever. A recent report stated that 52% of hospitality employees plan to change jobs to achieve a pay rise.
Many hospitality businesses are just trying to stay afloat throughout this time of inflation, and many are achieving this through keeping efficient hiring and retention in mind, and matching candidates with jobs that are the right culture fit. That said, pay rises are becoming harder to fund as energy bills and ingredient prices are putting financial stressors onto hospitality businesses. When compared to last year, gas and electricity prices were up 53.5% and 95.5% respectively in April, while average British salaries fell 1.2% in real terms. Inflation in the UK reached a four-decade high this year and it is something we are all living through, businesses and workers alike. 52% of hospitality operators expect to raise wages by 5-7% in 2022, but will this be enough to retain those thinking of leaving?
Conclusion
Inflation led pay rises are a cyclical process. As the cost of living and supply chain costs rise, the workforce will inevitably need a wage increase to support themselves. Hospitality businesses failing to adapt to these changes will ultimately lose staff to competitors prioritising increased wages. While a pay rise is one seemingly obvious solution, staff retention issues can not entirely be blamed on pay. A career in hospitality has historically been seen as a low paid and unskilled job, creating an illusion that it isn’t a serious profession. The responsibility now falls on businesses and professionals within the industry to seriously consider pay and working conditions and pitch hospitality as a desired career for many.
Author: Angela Byrne, Founder and CEO
