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Chronic staff shortages accelerate unprecedented hospitality wage inflation

Published:  30 January, 2023

Average wages for hospitality workers have risen 53% over the past 10 years, according to a new study released by charted accountancy firm Hazlewoods.

The firm's study indicated that the fastest-rising wages in the UK over the past decade have been in the hospitality industry, benchmarking the increase against nine other key sectors, including construction, agriculture, and financial services.

“Average weekly earnings for full-time workers rose 53% from £328 per week in 2012 to £502 per week in 2022,” the study proclaimed.

According to Hazlewoods, hospitality workers have also experienced the fastest wage inflation in the past year, with average weekly earnings jumping 23% from £409 in 2021to £502 in 2022.

Rebecca Copping, associate partner at Hazlewoods, said that the increase in wages over the past decade was partly due to rises in the National Minimum Wage. This figure has climbed by 53% in the last ten years, from £6.19 per hour in 2012 to £9.50 in 2022.

“The average hospitality worker has experienced four times as much wage inflation as the UK’s average worker, with average wages increasing 4.9% from £696 per week in 2021 to £729 in 2022,” she said.

However, wage inflation in the hospitality sector has also been fuelled by labour shortages, with Brexit restrictions reducing the number of workers coming to the UK from the EU.

Under the UK’s points-based immigration system, overseas workers must apply for a Skilled Worker visa. However, relatively few jobs in hospitality meet the skill and salary criteria required, according to Hazlewoods.

“Hospitality workers have seen minimum wage rises and Brexit combine to drive up their wages sharply over the past 10 years,” said Copping.

“Recruiting from what is a now a finite pool of workers in a much more competitive market has meant pay levels have had to increase markedly. Higher wages are good news for the staff in the sector, but they are putting the industry’s weak margins under even greater pressure.”

A report published by CGA this month made for sobering reading: 1,611 licensed premises ceased trading in the fourth quarter of 2022, due to soaring inflation.

“While Covid took a heavy toll on hospitality, these figures suggest the energy crisis is having an even more damaging impact. Given all the pressures, a drop of more than 1,600 venues in three months is quite shocking and every closure represents a sad loss of jobs and disappointment for communities and operators,” said Karl Chessell, CGA’s director for hospitality operators and food, EMEA.