UK company JD Wetherspoon have criticised the introduction of a national living wage.
The cheap and cheerful pub chain’s chairman, Tim Martin, believes Chancellor George Osborne’s announcement last week that the new pay policy would be introduced for all workers over 25 could lead to more pubs closing.
It is estimated that about 96 pubs close down every week in the UK.
Described as the “giant of the British pub industry” Mr Martin claimed the policy would hit his company hard during a time when the pub industry is already struggling with high costs and supermarket competition.
Mr Martin said: “Pubs contribute around 40% of sales as taxes of one kind or another and are important generators of jobs.
“Capricious initiatives by the government, widening the financial disparity between pubs and supermarkets, will threaten the future of many more pubs.”
‘The living wage’ will begin at £7.20 – a large jump from the current minimum wage level of £6.50 – and is scheduled to rise to £9.35 by 2020
Wetherspoon’s share price dropped by more than 7% on July 8 following the announcement.
JD Wetherspoon, which operates around 900 pubs in the UK, including Archibald Simpsons and The Justice Mill in Aberdeen, had already announced it would be raising its average minimum pay to £7.29 from August, but ‘the living wage’ marks an even bigger increase over the next four years.
Its chairman’s concerns come as the chain’s pre-tax profits are expected to fall 1.5% to £78m in the year to July 26.
And despite forecasts of a higher £86m profit for the financial year 2015/16 the firm has revised expectations downward, saying they anticipate no increase in profits from the £78m level.
The company called on the government to bring VAT sales tax and business rates for pubs in line with those enjoyed by supermarkets in order to stem the flow of British pubs closing down.