Hospitality has the UK’s lowest-paid workforce for the 14th year running

Recent statistics showed that just over half (53.1%) of UK hospitality jobs pay below the Real Living Wage (RLW) of £13.45 per hour. 

Low pay is an uncomfortable reality for the hospitality industry, fuelled by years of financial strain as the sector continues to face rising costs, uncertainty around business rates and wavering consumer spending habits. Employees naturally feel the effects of low pay immediately, but it also has wider business risks, including higher staff turnover, reputational damage and difficulty attracting top talent. 

A growing cohort of more than 500 hospitality businesses operating in the UK already pay the Real Living Wage. Is it time that the rest of the industry follows suit?

 What does the data actually show?

The Living Wage Foundation analysed data from the ONS Annual Survey of Hours and Earnings (ASHE) and found that 53.1% of hospitality employees are paid below the Real Living Wage, the highest rate in any UK sector for the 14th consecutive year.

In total, just under a fifth of the 4.4 million low-paid jobs in the UK are in the hospitality industry.

While there’s only a £1.24 difference between Minimum and Real Living Wage at present, this starts to add up quickly. 

According to The Caterer, a full-time worker on the Real Living Wage could earn £2,400 more a year than someone on the National Living Wage minimum. In London, where the living wage is set at £14.80 per hour to cover the higher costs associated with living in the capital, they say the difference works out to over £5,000 more.

Katherine Chapman, Director of the Living Wage Foundation, told the publication that the figures highlight the struggle for lower-paid hospitality workers.

“Today’s findings show that one in two hospitality workers are paid less than the Real Living Wage, the highest rate of any UK sector.

“Over three quarters of a million hospitality staff, as well as millions more across the UK, are still struggling to live with dignity as their pay is too low to cover basic living costs.”

Why low pay is a business problem, not just a workforce one

While low pay affects employees most immediately, it can also hurt the businesses they work for because it makes staff turnover tick up sharply.

Being stuck in a constant cycle of recruiting and training replacements is expensive, time-intensive and disruptive, and will eventually eat into any business’s bottom line.

The hospitality sector has one of the highest staff turnover rates in the UK, due in part to the fact that restaurants, bars and hotels are competing directly with retail and other service sectors for the same pool of workers.

If nearby employers raise wages, businesses paying just the legal minimum will naturally struggle to attract experienced applicants or build strong teams. So, in many cases, improving retention actually proves more cost-effective than having a revolving door of new employees.

Can hospitality businesses afford to pay more?

For many businesses, paying staff lower wages won’t be out of choice, but rather, financial necessity.

However, better-paid staff tend to report higher morale and engagement, which can translate into improved service, stronger productivity, and lower rates of absence. Over time, these gains can offset part of the upfront wage increase.

In addition, customers are increasingly attentive to how businesses treat their staff these days. Paying the Living Wage signals that an employer cares about its workforce, and that can influence where people choose to spend their money.

There is a broader economic argument as well. Research from the Living Wage Foundation suggests that when lower-paid workers earn more, they tend to spend more locally, including in shops, cafés and restaurants.

In other words, higher wages don’t simply affect one company’s margins; they increase spending power throughout the whole community. So if more businesses join the 500 already paying the Living Wage in the sector, the effect can circulate through the local economy, benefiting the industry as a whole rather than just individual businesses.