Brewer balks at minimum wage

Click to follow
The level of minimum wage being demanded by many unions would cost the leisure industry pounds 167m and lead to substantial job losses, according to a leaked memorandum to the Labour Party from one of the sector's biggest companies.

The confidential document from Whitbread, the brewing, pubs and food retailing group, calculates a rate of pounds 4.15 an hour would cost it more than pounds 27m without restoring any differentials for higher paid employees.

The report, A National Minimum Wage - A Whitbread Position Paper, claims that a statutory minimum wage would wreak havoc in remuneration and grading structures and on training. Whitbread added that the 3,000 jobs a year it creates would have to be cut and the career structure would be destroyed. Pay differentials would be eroded and management grades eliminated.

The company also said that premium rates for Sunday working would have to be cut and hours reduced. It calculates, however, that a rate of pounds 3 an hour would have a "negligible impact". The memo was sent to Labour by Whitbread last September as part of the party's consultation process with employers.

Labour has committed itself to the introduction of a legally backed minimum pay rate to be set by a Blair cabinet on the advice of a low pay commission. While the party is refusing to speculate on what the rate might be, it will come under considerable pressure at the TUC in a fortnight's time and at the party conference three weeks later to set a rate of half male median earnings. That formula has given a figure of pounds 4.15, but has been up-rated on the basis of fresh official figures to pounds 4.26 an hour. Unions have launched a campaign to win pounds 4 an hour for their lowest paid workers ahead of the election.

The Whitbread paper says that basic hourly rates are "anachronistic". The company's pub and restaurant division pays its 27,000 staff through a mixture of profit-related pay, incentive bonuses, free share ownership, employee assistance programmes, staff discounts and company pension schemes.

A spokesman for Whitbread said yesterday that it was difficult to speculate on the potential impact of a national minimum wage until legislation was drawn up. However, the company would continue to monitor developments in the area and emphasised that many other companies had responded to the Labour Party's request for an input from employers.