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The impact of the new National Living Wage on travel retailing was played down this week, although some agents are expected to struggle to fund the increase in wages.
Next month a living wage for over-25s of £7.20 an hour – equivalent to a full-time salary of £13,104 a year – will replace the £6.70 minimum wage. The government wants to see the living wage rise to £9 an hour by 2020.
The British Retail Consortium warned this week the wage hike, along with a new Apprenticeship Levy, could see up to 900,000 retail jobs lost in the UK by 2025.
However, Abta chairman Noel Josephides, who is also chairman of Sunvil Holidays, said current pay in travel means the sector is “fairly well insulated against the National Living Wage”.
Miles Morgan, managing director of Miles Morgan Travel, described the proposed increase to £9 as “substantial”.
“Our industry is not the best-paid,” he said. “Miles Morgan staff are remunerated well, both in terms of basic pay and bonuses, but others are not. There are small margins in travel.”
Morgan said agencies that had survived recessions were strong enough to absorb the rise, but he warned it could be the “death knell” for those that were struggling.
Luke Golding, Travlaw head of employment, reported some concern in the sector about the cost of complying with the living wage.
“It is set at a slightly higher level than the minimum wage and there is going to be a cost element and companies are, in some cases, going to struggle to pay it,” he said.
Golding said agencies can be exempt from paying the living wage if they employ staff on a self-employed basis, as some homeworking companies do.
But firms that offer commission-only employment terms are legally obliged to guarantee staff an income at the living wage level.
Golding warned companies that fail to pay it can expect greater scrutiny as the government enacts what is a marquee policy.
“I have not yet seen companies get to the stage where they are taking steps to avoid paying the living wage, but there is concern about the increase,” he said.
Abta said the issue of the living wage was being left up to individual members due to its “diversity of membership”.
The association confirmed it was a living wage employer. The association did express concern over the Apprenticeship Levy, which it said was too high.
However, an Abta spokeswoman said: “Many high street agencies will be exempt because only businesses with a payroll above £3 million will have to contribute.”