The increase in the minimum wage has received a lukewarm reception from many employers in Leeds who have expressed fears that the rate rise could cause job losses and reduced profits.
Indeed, many have argued that it could also result in businesses being ‘overburdened’ due to higher employment costs. Under new government legislation, wages will rise to £7.20 per hour for everyone 25 and over, although they will stay the same for under-25s.
Gordon Jackson, chair of Leeds Hotels & Venues Association, said: “The Association is very much in support of a fairer wage for everyone and the introduction of the National Living Wage has allowed us to further reward the hard working staff in the hospitality sector. Of course, there will be pressures on profitability for hotels and venues, and many will look to mitigate the impact by increasing tariffs and seeking ways to reduce overheads elsewhere in the account.”
Gerald Jennings, president at Leeds Chamber of Commerce, said that driving up wages will not solve the problem of low pay. He said: “While many companies have the ability to increase pay, others will struggle to do so alongside pensions auto-enrolment, the apprenticeship levy, employer National Insurance contributions, and other up-front costs. Some will have to divert money from training and investment to increase pay, which could hurt their productivity. Others may stop hiring altogether. The best way to get a high-pay Britain is through better education, training, and investment, by schools, universities and businesses alike.”
Unions welcomed the £7.20 hourly rate for adults - increasing by 50p from £6.70 – but said it was not fair that younger workers were missing out.
The Government’s aim is to increase the rate to £9 an hour by 2020, which would affect an estimated nine million workers.
Research by the Resolution Foundation found that more than one in four employees in Yorkshire will benefit. Around 2,300 employers have signed up.