​Hospitality Jobs Under Pressure as Employment Costs Rise by £2,500 per Worker

In a recent analysis, UKHospitality has raised concerns over significant increases in the cost of employing full-time staff within the hospitality sector. According to their findings, businesses will see a substantial 10% rise in employment costs per worker, translating to an additional £2,500 for each full-time employee. These increases stem from rising National Insurance contributions and the new wage levels, which will place significant financial strain on hospitality businesses nationwide.

The cost assessment by UKHospitality is based on a typical 21 or older worker working 38 hours a week at the National Living Wage. For this worker, the employer's National Insurance contribution is projected to rise by 53.9%, jumping from £1,863 to £2,869 annually. Such figures highlight the mounting financial challenges faced by the industry as it contends with these increased contributions on top of wages.

UKHospitality's report reveals that the financial impact will extend across various types of employment. For example, a single parent working a reduced schedule of 9 am to 3 pm, five days a week, will cost employers an additional £2,100 per year. Even part-time roles are affected; a student working 14 hours over the weekend will incur £1,140 more in employer expenses. These figures underscore the widespread impact on the industry, affecting full-time and part-time employees.

Kate Nicholls, chief executive of UKHospitality, expressed her concern, describing the rise in employment costs as "eye-watering" and far beyond worst-case expectations. She warned that these increases are unsustainable for many businesses and may force employers to rethink their staffing strategies. "The overwhelming feedback from the sector is that this is just not sustainable and will ultimately do real harm to our ability to support employment," Nicholls noted.

The response from the sector reflects a growing concern that businesses may need to take drastic measures to manage these rising expenses. Nicholls cautioned that hospitality venues might have to halt recruitment efforts, reduce working hours, and, in severe cases, consider redundancies. Such decisions could fundamentally alter staffing levels across the industry, affecting service delivery and growth potential.

While acknowledging the government's fiscal challenges, Nicholls highlighted the potential long-term consequences of placing a disproportionate financial burden on high-street businesses. "Balancing the books disproportionately at the expense of high street businesses will ultimately have negative consequences for growth, investment, employment, and our communities," she remarked. This warning serves as a reminder of the interconnectedness of economic policy and local business sustainability.

With the new employment costs set to affect a vast array of businesses within the hospitality sector, the industry faces a critical juncture. The increase in expenses may force many operators to make difficult decisions, ultimately influencing countless workers' availability of jobs, hours, and wages.