18 November 2015
Managing the higher costs of the new National Living Wage by increasing productivity is much less likely to be a solution for labour-intensive service industries such as hairdressing, barbering or beauty. The government’s emphasis on increased efficiency conjures up visions of an ‘Edward Scissorhands’ approach to hairdressing, yet the customer experience is a very important element of what we do.
“93% of hairdressing salons, barber shops and beauty salons employ less than 10 people and two thirds are significantly smaller, employing 5 people or less. Recent research carried out by the NHBF shows that small business employers in the hair and beauty sector are likely to respond to increased costs by:
- Increasing prices charged to customers
- Reducing the number of employees or reduce their hours
- Making a smaller profit
- Switching to chair renting (self-employment)
- Selling or leaving their business
Small business employers are genuinely worried about the impact of the new National Living Wage, especially as it comes at the same time as increasing costs due to automatic enrolment into pensions. Any government support such as reducing VAT for the hairdressing sector (as in many European countries), making small business rate reliefs permanent, and greater tax benefits would help to offset some of the costs.
For the findings of the CIPD/Resolution Foundation research into the impact of the new National Living Wage go to http://www.cipd.co.uk/pressoffice/press-releases/nlw-rf-release-181115.aspx