Fourth reveals period of aggressive hospitality wage inflation halted by pandemic

Fourth reveals period of aggressive hospitality wage inflation halted by pandemic

The latest data from Fourth, the leading global software provider for hospitality and leisure businesses, reveals the average hourly wage for hospitality workers over the age of 23 sat at £8.98 during March 2021 – only 7p higher than the new National Living Wage (NLW) threshold introduced on 1 April – putting an end to an unprecedented period of wage inflation.

The data, which comes from a cross section of companies across the restaurant and bar sectors, reveals a significant reduction in the acceleration of the cost of labour, which only increased by 12p from March 2020 (£8.86) to March 2021 (£8.98). The figure, which is a direct result of the pandemic, is significantly lower than the traditional rate of wage inflation, which, for the top age bracket, has tracked significantly ahead of new legislative NLW increases for the past two years – 39p higher in 2019; 51p in 2018.

The news comes after the Government made changes to the NLW structure, reworking the age brackets by reducing the threshold for the highest paid bracket from 25 to 23. The 16-17, 18-20 and 21-22 age brackets remained the same.

The data also highlights a change in the age profile of the industry, with a reduction in the number of younger workers. The data reveals that 16-22-year-olds now make up less than a quarter (24%) of the overall hospitality workforce (down from 32% in 2020); while those over 23 make up 76% of the workforce (up from 68% in 2020). Workers in the 21-22 age bracket currently make up 12% of the workforce, while workers aged 18-20 make up 11%, and workers aged 16-17 make up just 1%.

The restaurant sector is predominantly made up of workers over 23 (82%), whereas just under three quarters of the pub sector fall into that age bracket (70%). Both sectors’ workforces have grown by 8% respectively in these age brackets over the course of the past year, highlighting the impact the pandemic has had on younger and more inexperienced workers.

When looking at average pay rates across these cohorts during March 2021, workers aged 16-17 earned £6.53 per hour (£1.91 more than their new NLW threshold); workers aged 18-20 earned £7.38 per hour (82p more than their new NLW threshold); and workers aged 21-22 earned £8.56 per hour (20p more than their new NLW threshold).

Digging deeper into the data, the figures reveal that the gap between hourly paid back-of-house (BOH) and front-of-house (FOH) workers has increased. BOH workers aged 23 and above earned £9.13 per hour throughout March; while FOH workers earned £8.79 per hour over the same period.

When broken down by sector, the average hourly wage rate for restaurant workers aged 23 and above has seen a slight increase to £9.00 – up 2p since April 2020 (£8.98). Pub workers aged 23 and above have experienced a small spike, with workers earning on average £9.17 – up 10p from April 2020 (£9.07).

Max Tucker, Director of Analytics EMEA, Fourth, said: “The industry has experienced an unprecedented period of labour inflation in the years building up to the pandemic, driven by the fight to attract and retain the best talent. This bubble has been emphatically burst by the pandemic, but with the legislative increases to the National Living Wage coming into force, and the staggered reopening of sites on the horizon, the indications are this is about to change.

“Interestingly, there has been a clear shift in the age profile of the workforce, with a significant reduction in workers from younger cohorts. As we look ahead to reopening, and with some operators looking to streamline their teams and rely on experienced individuals to do multiple tasks, it will be interesting to see how these figures evolve. Traditionally, we’ve seen businesses utilise young workers and their flexibility to drive efficiencies through dynamic scheduling, something we anticipate will continue upon reopening.

“What’s not clear is the long-term impact the pandemic will have on wage rates. There has been a reduction in the number of sites in the UK, but research also indicates that there has been a shrinking in the pool of available workers, with the ongoing churn of workers coming and going from the European Union slowing down, due to travel restriction and tighter immigration restrictions. What is clear is that the management of labour costs is as important as ever for operators, who will look to hit the ground running and harness the power of technology to drive efficiencies across their business, as they look to come back better during this crucial trading period.”


| Category: Food and Drink Company News