New National Minimum Wage Major Challenge for NI Hospitality industry

10 July 2015

The Chief Executive of Hospitality Ulster has warned that the hike by the Chancellor during this week’s Budget of the national minimum wage, might be a popular political move but presents a major challenge to the hospitality industry in Northern Ireland.

The body which represents pubs, restaurants and hotels in Northern Ireland says that even though the intention may have been good, the Chancellor has created a situation which could see job losses in the hospitality sector here.

Colin Neill, Chief Executive of Hospitality Ulster said today:

“The impact of the Chancellor’s ‘living wage’ announcement on the hospitality industry will be considerable. The industry now needs to prepare for a significant increase in staff costs.

We are all for increasing levels of pay for workers in the sector, but raising wages in this way will put a serious strain on smaller businesses particularly those with tight margins.

We are already a low wage economy in Northern Ireland and a significant portion of the workforce is on or just above the minimum wage.  In reality, the hospitality sector is largely labour intensive - what might seem like a flawless service delivery requires a large number of people.

The impact that the minimum wage hike has on businesses is an extra cost that cannot be passed on to customers. Paying staff more will require greater efficiencies to be squeezed out of the business elsewhere.

This is unlikely to happen in Northern Ireland as many run very lean businesses in the first place so the automatic decision will be to shed staff.

The hospitality sector is a main driver of the local economy employing 1 in every 20 jobs and contributing over £650 million in wages. Placing a further burden on the food, drink and accommodation industries will inhibit growth, not support it, and we call upon the NI Executive to raise this matter with the Chancellor as soon as possible”.