Earlier this month, greater than 100 Pizza Hut supply drivers for Scotland’s greatest takeaway franchisee have been referred to as to an emergency assembly and supplied an unwelcome selection.
Managers of the Glenshire Group, which runs supply retailers throughout Scotland, advised workers they’d a selection: take an efficient pay lower, transfer to an in-store function or swap into self-employment.
The modifications, bosses stated, have been wanted to deal with will increase to nationwide insurance coverage contributions (NICs) and minimal wage charges that take impact this week — sharply elevating labour prices for employers of low-wage staff.
Bryan Simpson, lead organiser for hospitality on the union Unite, who relayed the small print of the Glenshire trade, stated the modifications set a “harmful precedent” in a sector the place many employers have been transferring staff to shorter or zero-hour contracts to chop prices.
“This isn’t a small enterprise — it’s the biggest franchisee in all quick meals [in Scotland] transferring to a self-employed mannequin,” he stated. “That actually worries me for the message it may ship to the remainder of the sector.”
Glenshire stated it had not modified staff’ contractual phrases and was “partaking instantly with our colleagues to know their issues”.
However the row displays the pressures employers throughout the UK are coping with in opposition to a backdrop of weak progress and client spending.
Wage payments have been rising quick for a number of years. However from subsequent week, employers face a twofold drawback. On April 1, the grownup minimal wage will rise by 6.7 per cent, whereas charges for youthful staff leap at greater than twice that price. From April 6, employers can pay the next price of NICs for any staff incomes greater than £5,000 a yr — half the present threshold.
When chancellor Rachel Reeves introduced the NICs enhance in her October Price range, the Workplace for Price range Accountability stated a lot of the price could be borne by staff by way of slower pay progress and better costs, whereas the equal of fifty,000 jobs could be misplaced by way of fewer roles or shorter hours.
However the fiscal watchdog didn’t have a look at the mixed impact of the tax and minimal wage rises. It admitted final week that the tax rise may hit jobs greater than it initially anticipated, as a result of it elevated prices most sharply in low-wage sectors the place employers should maintain elevating pay, each to match the authorized minimal and to encourage workers increased up the ladder.
Evaluation by the Decision Basis reveals how uneven the affect will probably be.
Whereas subsequent week’s mixed modifications will add 3.4 per cent to common labour prices, the rise will probably be 6.6 per cent for the underside 10 per cent of earners, in keeping with calculations by the think-tank. It is going to be simply 1.7 per cent for the highest 10 per cent.
There will probably be an particularly stark change for part-time staff, the think-tank stated. Whereas labour prices will rise by 10.2 per cent for a full-time grownup incomes the minimal wage, they’ll rise by 14.2 per cent for a part-time employee incomes £10,000 a yr on the identical hourly price. This employee would beforehand have fallen under the NICs threshold.
Nye Cominetti, principal economist on the Decision Basis, estimated this may result in a drop in employment equal to the lack of 85,000 staff, concentrated among the many lowest paid. He forecast a drop in employment of 0.7 per cent within the backside decile of the pay distribution.
“It is a important quantity . . . which might have been smaller if coverage had been higher co-ordinated,” Cominetti advised the Monetary Occasions.
Knowledge launched final week by the Workplace for Nationwide Statistics, based mostly on enterprise surveys, confirmed the variety of jobs in hospitality fell 1 per cent between September and December of 2024, whereas retail jobs fell 0.2 per cent on the quarter and 1.2 per cent on the yr.
Sainsbury’s and Morrisons are among the many huge retailers who’ve introduced recent job cuts for the reason that begin of 2025, closing cafés and meals counters to assist include price will increase.
Elsewhere, hefty will increase in primary pay have include a lack of different perks. Tesco, which can maintain its hourly price for retailer workers above the brand new minimal wage, although by a smaller margin than beforehand, will scrap Sunday premium funds.
There may be additionally proof of the associated fee will increase holding again hiring within the wider labour market. Nevertheless, the affect has not been as unhealthy as some gloomy enterprise surveys initially instructed, with payroll employment broadly steady for the reason that Price range and the most recent real-time knowledge displaying a rebound in postings of on-line job advertisements in February.
James Hilton, chief monetary officer on the recruiter Hays, stated he was seeing a lot of corporations placing momentary hiring freezes in place after the Price range, together with different cost-cutting measures. The everyday new yr pick-up had materialised, he stated, however employers have been nonetheless dragging out the interview course of and “punting the choice down the street”.
However Helen Dickinson, chief government of the British Retail Consortium, warned there was a danger of the coverage modifications rebounding on low-wage staff in different methods, making retailers much less keen to supply versatile, part-time hours or take a danger on much less productive, youthful hires.
This may undermine the federal government’s legislative drive to strengthen workers’ rights and its hopes of serving to sick and disabled advantages claimants transfer into work, she argued.
“Is the federal government occupied with how all these totally different insurance policies match collectively? You need to get these individuals into work . . . you don’t need to make it any tougher.”
Knowledge visualisation by Amy Borrett
