Whitbread, the owner of Premier Inn hotels and Costa Coffee, said it expected to cut spending and increase some prices to counter the “substantial” cost of the “national living wage”, as it posted slowing second-quarter sales.
The chancellor, George Osborne, announced a bumper pay increase in July, with the current £6.50 minimum wage set to rise to £7.20 for those aged over 25 from next April. The rate will grow steadily over the following four years to about £9.35 an hour.
Whitbread said on Tuesday it was developing plans to mitigate the “substantial cost increase” and would announce details of its plans at its half-year results on 20 October.
One of Britain’s largest recruiters, Manpower, said in a report that the changes are sending shockwaves through the job market as employers seek ways to minimise the extra costs.
Employers are attempting to avoid paying the new rate by using groups of self-employed workers or focusing recruitment on younger people, according to Manpower. Others had put a block on new recruitment altogether, it said.
Manpower said its survey of 2,100 employers suggested many were scaling back recruitment plans for the rest of the year, with some blaming the new minimum pay rates .
Whitbread said group like-for-like sales grew by 3.3% in the 11 weeks to 13 August, slowing from growth of 4.3% in its first quarter, though Whitbread said it remained on track to meet full-year expectations.
Underlying sales at Premier Inn rose 4.3% in the period, compared with 6.3% first-quarter growth, with new openings helping total sales rise 11.6%.
Total Costa sales grew 16.2%, with sales at UK stores open over a year up 4% against strong comparatives and softer than expected trade in August.
This article was written by Staff and agencies, for theguardian.com on Tuesday 8th September 2015 08.38 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010