Hospitality businesses warned to brace for higher wage cost

Wages could increase by 50% for workers aged 18 to 20.

Hospitality businesses need to prepare for an increase in staff costs which will squeeze margins and potentially derail recruitment plans as Labour pledged to remove age thresholds and increase the national minimum wage rates to consider the cost of living, Saxon Moseley, partner and head of leisure and hospitality at audit, tax, and consulting firm RMS UK.

This could see the rates jump to nearer the Real Living wage levels, Moseley said.

“The result could be a whopping increase in wages of over 50% for workers aged 18-20 in April 2025; and an increase of almost 15% in those aged 21 and over, which will acutely hit the hospitality sector and its staff. In addition, if planned changes to zero hours contracts come into play operators will have less flexibility and may have to draw on more expensive agency staff to cover illness, holidays and peak periods,” Moseley added.

 “There are three quick wins that the new government could deliver to support the hospitality industry now. Firstly, replacing the business rates system to alleviate the biggest burden for hospitality businesses, and stimulate growth. Second, reduce the threshold for visas within hospitality roles to close the skills gap and help recruitment for key jobs such as experienced chefs which the industry is currently lacking. Thirdly, cut VAT on food and drink sales to help businesses who have seen margins eroded in recent years.”