15 March 2016
The government’s announcement that National Minimum Wage rates will rise once again from October, on top of the introduction of a new National Living Wage from next month, will put small labour-intensive salons under intense pressure, the NHBF has warned.
And the revelation that in 2017 the National Minimum Wage will be “uprated” in April rather than October to bring its timing into line with any National Living Wage increase, means salons face the prospect of having to cope with three significant wage increases within the space of 12 months.
This year’s increases also come on the back of a record 21% rise in the apprentice minimum wage last year, rising business rates and rents and the fact many salons are having to fund pensions for their staff under pensions auto-enrolment for the first time.
The National Living Wage will mean employees aged 25 or over who had been on the adult minimum wage will see their pay rise from £6.70 an hour to £7.20 an hour from April 2016.
Then, from October 2016, the rates for those aged 21-24 and 18-20 will both rise by 25p to £6.95 an hour and £5.55 an hour respectively. The rate for 16-17 year-olds will increase by 13p to £4 an hour and the apprentice rate will rise by 10p to £3.40 an hour.
But NHBF president Paul Curry warned the cumulative effect of these increases, and prospect now of more to come in April 2017 (when the timing of National Minimum Wage and the National Living Wage rate changes will align), is deeply worrying for many salon owners, even with the recent recovery seen on the high street.
“We recognise many salons are benefiting from an improved economic climate, even though there are worries about the longer term outlook, and it is only right employees share some of that.
The number of wage and cost increases now coming through, one after another, are unsustainable for small, labour-intensive businesses such as hair or beauty salons and barber shops.
“Salons will have no choice but to find this money from somewhere. While some of these increases can be passed on to customers, the danger is it’ll also mean salons will have no option but to freeze recruitment and training, reduce hours or even lay off some staff.
NHBF’s chief executive Hilary Hall added,
We strongly reject the Low Pay Commission’s suggestion that such year-on-year increases are ‘manageable’ for employers. Quite the contrary, for many small owners these increases on top of everything else could well be the tipping point as to whether they continue in business or not.
“There’s nothing now that can be done about these October increases, but we urge the government to reign back on any further rises next year.”
National minimum wage rates per hour from October will now be:
*The apprentice rate applies to those aged 16-18 training on an apprenticeship and to those aged 19 or over who are in the first year of an apprenticeship, after which they revert to their appropriate age-related rate.