The NHBF had its annual evidence session with the Low Pay Commissioners this week to discuss the impact of the latest increase in the National Minimum Wage and National Living Wage.
Whilst the NHBF supports the principle that everyone is entitled to a fair wage, they reinforced the point that there must be a fine balance between increasing wage rates and allowing businesses to recover from one of the worst economic episodes of our lifetime during a very fragile and unpredictable period.
The NHBF representatives who met the government’s Low Pay Commissioners were:
- Richard Lambert (NHBF chief executive)
- Paul Elliott (Elliotts Hairdressing, Bedford & Northampton)
- Edward Hemmings (Alan d Hairdressing Education – London)
- Amanda Lodge-Stewart (The Link Academy, Huddersfield; NHBF Vice-President)
- Mikaela Martin (Ginger Rabbit, Farnham)
They made the following key points:
- As a sector, hair & beauty has been hit worse than most sectors by the pandemic and still faces an uncertain future.
- Profit margins are already squeezed and there is little expectation that clients will accept an increase in prices.
- Lowering the threshold for paying the National Living Wage to 23 has already prompted employers to reduce hours or make staff cuts. We may not see the full impact until furlough ends.
- Many businesses have either cut apprenticeships or do not plan to offer them because of the increased cost of employing them.
- The additional cost when an apprentice turns 19, or is an older starter moving into their second year is a particular issue.
The Commissioners asked specifically about the perception of enforcement – that is the fining or name-shaming of employers who do not pay staff their legal wage. The NHBF responded by saying that the industry view was that this seems to focus more heavily on those who make genuine mistakes rather than pursuing those who actively ignore the law, paying cash in hand and exploiting self-employed hair & beauty professionals who need to earn money above all else.
NHBF chief executive, Richard Lambert says, “It’s a relief that salons and barbershops are re-open and without wishing to focus on the negative we have a duty of care to our Members to lobby all government departments and representatives about the laws that affect them, both now and in the future.
The National Living Wage is expected to rise to £9.42 an hour in 2022 and to £10.33 by 2024. Employers can’t guarantee that kind of money. Increases in the National Living Wage would mean that the minimum you must pay is nudging up against what is currently offered to more skilled and experienced staff – who will then also expect an increase in their salary to reflect this difference.”
He adds, “Wage costs currently average around 60% of turnover, so increases will add to the squeeze and profitability vanishes completely when wage costs go past 70%.”
The key points raised were taken from the results of the NHBF State of the Industry surveys undertaking throughout the pandemic plus the commissioned report, Hair, beauty and the pandemic: An industry at the sharp end. The impact of coronavirus on business vulnerability and the potential for mitigating measures, undertaking earlier this year.
The Low Pay Commission is due to make its recommendations to the government by October. The government will then decide on the National Minimum Wage and National Living Wage rates for the following year.