Nearly one-fifth of hospitality employers have boosted wages to combat the hiring crisis in the industry, according to The Caterer.
Pay rises in the industry translate to an estimated £1,164 per year extra for those in full-time waiting roles, for example, and £1,196 for kitchen staff, meaning that pay for hospitality staff is outpacing inflation.
Many of the headlines relating to the rising salaries in the industry focus on the rise as being a result of employers attempting to combat the hiring crisis - but is this true?
How exactly are rising salaries in hospitality impacting the industry, and is it good or bad for business?
What is the current wage outlook in hospitality?
Senior managers have received the largest salary increase, according to research by Barclays Corporate banking, with an average increase of 7.7% this year.
Other roles that have received a similar salary increase include:
- Delivery staff (7.5%)
- Housekeeping (7.4%)
- Finance staff (7.3%)
- Bar staff (7.3%)
- General maintenance (7.2%)
- Marketing and sales staff (7.2%)
- Waiting staff (7.1%)
These roles – many of which are seen as difficult to fill – are seeing their pay rise in response to the hiring challenges facing hospitality employers.
Hiring shortages in waiting staff, front-of-house staff, delivery drivers and cleaners are all impacting the way in which wages are rising and/or changing.
These developments, according to the research, are industry-wide. It is in part due to the increasing need to fill hiring gaps, as well as addressing the cost-of-living crisis (which is likely to negatively impact these wage increases as costs continue to rise).
Our thoughts
Our Director, Adrian Pate, has seen firsthand the positive impact that rising salaries are having on the candidate side.
The primary issue, he explains, comes from companies not reacting to this change and therefore struggling to recruit employees because their offer isn’t competitive - this is an even greater challenge when there is a lack of flexibility due to ROI from owners.
In the current market, what would’ve been a £40k-£45k salary for a Director of Sales pre-covid for a corporate city centre 4* hotel outside of London is now circa £60k for the same role.
Counter offers have also been instrumental in this change, as a shortage of quality candidates means that it would be cheaper to offer an inflated salary to keep a Director of Sales rather than to go without, or to pay hefty agency fees for a replacement.
Salary expectations rise, and this is how we’ve found ourselves in the situation we’re in now!
Good: It’s important for employees
Though having a range of benefits is important to hospitality employees – work-life balance, flexibility, mental health and wellbeing support – pay is still the most important factor for workers in the sector when they are deciding on job offers.
When hospitality employees were asked to give their top reasons to explain current staff shortages in the industry, 47% cited pay not matching the job as a primary factor.
Additionally, 72% of current hospitality workers that saw their jobs as less appealing highlighted insufficient pay rises as the most important reason.
This makes pay rises an influential factor in both the attraction and retention strategies for organisations in the sector.
With hiring presenting such a significant challenge, any factor that can fill vacancies will be deemed as more favourable for employers, as it means that they know where to focus some of their hiring efforts.
Though some may argue that employees demanding higher wages will simply drive even fiercer competition between employers, there is also the argument to be made that it is at least a starting point for businesses to form attraction and retention strategies in a way that is most effective.
Bad: It’s not a sustainable practice
Wages are now exceeding 30% of turnover, which alongside other pressures on the hospitality industry such as the pandemic and Brexit, could be problematic (this is in comparison to the usual benchmark of around 20%).
Pay for many hospitality jobs can be seen as volatile – pay increases are likely to reflect the short-term hiring challenges that the industry is facing, rather than a sustainable value placed on specific roles and skills.
Unlike other elements of an employee benefits offering, pay rises are entirely dependent on factors that are prone to significant changes over time, whether due to company profit or economic change.
There is also a wider range of options available for attraction and retention that are more sustainable and cost-effective, making pay rises seem like a risky option to hospitality businesses by comparison.
Given that the general perception of the hospitality industry to the younger generation isn’t the most positive due to associations with long, unsociable working hours and a highly demanding environment, greater effort likely needs to occur with other elements of hospitality, rather than wage alone.
Good: It’s an industry-wide change
Rising wages isn’t a strategy exclusive to the odd competitive hospitality business or only to specific branches of the industry.
According to research, increasing wages as an attraction strategy to draw in candidates is adopted by:
- 33% of restaurants
- 26% of gyms and leisure centres
- 25% of holiday parks
Though other methods of recruitment may prove more popular, it is clear that many hospitality businesses are recognising the importance of offering competitive pay.
The main difference is, however, that higher salaries should also be used sensibly in tandem with other benefits to stay sustainable, effective, and competitive.
Benchmarking is an important element of any recruitment strategy, so it’s essential for organisations in the hospitality industry to take note of these salary changes to be able to adjust accordingly.
Bad: It’s likely to cause other cutbacks
Though the impact of pay rises may differ depending on the size of a hospitality company, for smaller companies, it will increase the share of labour costs taken out of the revenue.
As mentioned earlier, wages are now exceeding 30% of turnover, which is unsustainable for many businesses and will cause a knock-on impact on other areas.
For example, employers may have to cut back on other investments that could enhance their processes or business offering, such as training programmes or better equipment/technology.
As a domino effect, this could also mean that hospitality businesses will experience reduced productivity due to cost-cutting measures – altogether, there is a negative long-term consequence that could be difficult to reverse.
The end verdict
Boosted pay is, at face value, a positive change in the hospitality industry.
At a time when hospitality is making a steady, positive recovery from the pandemic, pay rises simply seem to account for the continuing challenge of high vacancies.
However, hospitality businesses should be aware that increasing salaries is only one facet of a strong recruitment and retention strategy, and it isn’t the most sustainable option.
Instead, businesses should focus on a full package of benefits for employees – in which wages of a reasonable level by benchmarking standards are included – and efforts are made to ask existing employees for their feedback on the most successful elements of a retention strategy, too.
Get in touch
Our team at Talent Hive has in-depth knowledge of the challenges of hospitality, and we’re passionate about helping hospitality businesses like yours secure the best talent.
Get in touch today to find out how we can help.