National Minimum Wage increases will hamper recovery in hospitality and care
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National Minimum Wage increases will hamper recovery in hospitality and care

By James McDougal

While the 2021 Autumn Budget announcement that the National Living Wage and National Minimum Wage will increase from 1 April 2022 is a welcome boost for employees who are facing increasing costs following the pandemic, it is another blow to the hospitality and care sectors who have been two of the hardest hit sectors over the last 18 months.

Employers were already facing increasing costs following the earlier announcement that there will be a 1.25% increase in Employers NIC from April 2022 which will become the health and social care levy from 2023. We previously blogged about this here

The hourly rates will be increased as follows:

Current rate From April 2022 % increase
23 and over £8.91 £9.50 6.6%
21 to 22 £8.36 £9.18 9.8%
18 to 20 £6.56 £6.83 4.1%
Under 18 £4.62 £4.81 4.1%
Apprentice £4.30 £4.81 11.8%

For an employee working 40 hours per week the additional wages, employers NIC and pension contributions mean employers are facing a weekly increase in cost of £30.19 or just over £1,500 per year for each employee.

Salary (40 hours per week) Employers NIC Pension contributions (3%) Total
Current position £356.40 £25.72 £5.59 £387.71
From April 2022 £380.00 £31.60 £6.30 £417.90
Increase in costs £30.19

When looked at across a whole workforce it is easy to see why the hospitality industry and care sector will be worried about their futures without increasing their costs to us all which means that no one wins from the announcement.

For more Autumn Budget analysis, visit our Budget hub.

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