The food and drink industry needs to rise to the occasion and prepare for the impact of the new National Living Wage (NLW), a leading recruitment agency boss has warned.
The controversial NLW 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 will come into force in April 2016, though some businesses such as bakery and café chain Paul, have already introduced the new rates.
However, Derek Ferrol, from Glasgow-based EasyRecruitUK has warned that many businesses have not yet begun preparations for the new rates, with less than five months to go before implementation.
Ferrol said: 'The impact of the NLW could take us back to the dark days of the 1970 and 80’s. 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, quite simply, requires a flexible cost base. One that is not fixed, rigid or beyond the control of the business.'
The increase is expected to boost the wages of six million people, however leading businesses such as JD Wetherspoons and public bodies have warned of adverse effects. The Office for Budget Responsibility – an independent body that analyses UK finances – has predicted that 60,000 people will lose their jobs as a result of the changes.
Ferrol 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. [This will] make an organisation more resilient and progressive in challenging times.'