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How retail and hospitality employers are facing the National Living Wage

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I recently had the opportunity to chair a panel session at the ‘Better jobs better business’ conference in Leeds with employers and key players that UKCES is working with to explore ways of improving low paid jobs in the retail and hospitality sectors. The conference, organised by the Joseph Rowntree Foundation, brought employers and national and local stakeholders together to discuss how they might create better jobs, for the benefit of individuals and businesses, in these sectors.

There was lively debate in the earlier sessions in the day on the issues facing employers and how difficult it is to create or improve better jobs for low paid workers.  Our panel session was timely as we were able to showcase practical examples of what employers are doing in these areas.  I was struck by how valuable other employers and stakeholders in the audience found hearing about the reality  of what our projects are doing and how enthusiastic they are in wanting to learn from and possibly replicate these models in their businesses.

These issues are very relevant to the recent introduction of the National Living Wage (NLW), with many businesses in low-paid sectors in particular commenting that the NLW will raise their labour costs considerably.  For most of these employers, cuts to employment levels are not an option and will have adverse effects on their business. The UKCES co-funded projects are models of how businesses have started to improve low paid jobs in retail and hospitality through a range of different approaches.  This has not been easy and the projects have worked through a number of issues to achieve early success.

Our work in this area is part of the UK Futures Programme, which tests new ways of addressing specific skills and business practice problems, and I am leading on this particular challenge.  There have been some really encouraging early indicators with businesses already reporting increased productivity and bottom-line profits, greater staff retention, improved staff satisfaction/motivation and reductions in their recruitment costs as a result of trialling new ways to increase the value of low paid jobs.

We have a range of examples of how the large businesses involved are approaching this, including:

EE, who are working with The Living Wage Foundation (LWF) to make changes to operational business practices and improve employee engagement and business performance.  They were experiencing a high staff turnover due to the fact that staff wanted to work more hours.  They offered the opportunity to all staff to increase hours and are trialling an average increase of 9.5 hours (£4.5k increased pay), for 650 of their employees across 150 stores. They will be evaluating the results of this over the next few months.  From this, and working with two other retailers, LWF are developing a 'Good Jobs' toolkit to offer practical support and advice to a wider range of retailers.

Accor have re-designed 4 job roles across the key areas of business in their hotels – catering, cleaning, front of house and back of house – and merged these into one role to enable staff to multi skill across these roles and increase their hours and pay.  They are piloting this across 5 hotels and early indications are that the individuals and the hotels are finding this rewarding.  Accor will be evaluating the impact of this across the participating staff and hotels and comparing this against hotels and staff not taking part.

We also have a range of examples of how the small to medium businesses involved are approaching this including:

Jamie Oliver's Fifteen Cornwall who are working with Watergate Bay Hotel, St Austell Brewery, Cornwall College and Visit Cornwall to help small employers in the region improve business productivity by investing in training and supporting career progression. Building on high quality working practices that encourage staff to work and develop across different roles and skillsets to improve business performance, the collaboration has developed a toolkit that will enable other small businesses to take similar approaches.

Retailers at the London Designer Outlet are working with Realm (who manage the outlet) to design training (currently focussed on customer service and sales).  An onsite skills academy has been set up for the retailers to access the training.  Individual staff and staff acting as their mentors within the individual businesses are taking part in the training and implementing their learning directly in the workplace. Realm is working with the retailers to support them in putting the training into practice and improve business practices.  This model has the potential to be replicated in other outlets and shopping centres.

Small hotels across Bournemouth are testing the 'service-profit' chain principle that says that high quality customer service arising from better workplace practices leads to improved business performance and higher pay. They are working with the National Coastal Tourism Academy to improve the way in which new staff are inducted, trained and managed, and producing guidance to support other small businesses to do the same.  Staff from the small hotels are also taking part masterclasses on key topics.  Early indications are that individuals taking part have made changes to their individual performance and business practices. This model has the potential to be rolled out nationally.

We want to share these models and the practical guidance and toolkits so that other businesses can learn from this experience and join in or replicate these.  You can find out more about this work from our website and the full evaluation report will be available in summer 2016.

In the meantime, UKCES and the individual projects are happy to speak to employers and partners who are interested in finding out more.

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