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Hospitality Magazine column Covering the cost of Government intervention 2007 will see the introduction of two new Parliamentary driven costs. Both are set to impact from 1 April 2007. On this date the minimum wage will increase to $11.20, a whopping 10% increase, and on the same date, all employees will become entitled to four weeks annual holiday and all the costs associated with that. For the hospitality industry, it’s not just the cost of the extra week’s holiday it is the cost of ensuring that business goes on with those staff on holiday needing to be replaced and the additional costs. While the industry may be unhappy about these extra costs, they are a fact of life and what is important is that these costs are passed on to the consumer and not simply absorbed therefore eroding already limited margins. As 1 April looms, every hospitality business should be looking at their pricing structure and making the appropriate adjustments to ensure margins are maintained. To not do so is to put the business increasingly at risk. 1 April will also be a good opportunity to look at recovering other additional costs which are flowing through the system. The impact of increased rates, fuel, and labour costs, all need to be recovered and 1 April provides an excellent opportunity to restructure prices whether it be for a cup of coffee, a meal, a beer or a night’s accommodation. The message needs to be clear that the cost of increased employee benefits through increases in the minimum wage and an additional week’s holiday will ultimately be borne by consumer. The Government decided that employees will benefit, and to survive, the industry must pass this on. Bruce H Robertson 12 January 2007 |
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