How your business can survive the National Minimum Wage increase

Industry sectors including hospitality, retail, and logistics are grappling with staffing issues due to the challenging economic climate. Many already operate on slim profit margins, with staffing costs as their primary variable expense. The April 2024 increase to the National Living Wage will likely add another financial strain. This poses a greater challenge for these industries in striking the right balance between cost management and providing the service that guests expect. With consumer confidence already low, employing conventional strategies to address rising staff costs tends to exacerbate the challenges. 

But there are options. In this article we’ll explain the facts and implications of the changes in April and how Temper can help your business reduce overheads, without compromises.

The National Minimum Wage increase

In April, the National Minimum Wage for over-21s will increase from £10.42 to £11.44 per hour, a spike of 9.8%. This shift will impact approximately 2.7 million workers. Workers aged 18-20 will see an even more significant raise of 14.8%, resulting in earnings of £8.60 per hour. This is good news for workers, but a challenge for businesses who also have to consider costs on top of the hourly wage, such as holiday pay,National Insurance, and the Pension and Apprenticeship Levy. 

Strategies for navigating staff cost increases

In the face of rising staffing costs, you may consider the following options:

• Increasing prices: This can be a double-edged sword, potentially deterring customers and reducing brand loyalty.
• Reducing staffing: Making this compromise can impact service quality, leading to a decrease in customer satisfaction and repeat business. It can also add additional pressure on remaining colleagues.
• Decreasing operating hours: While scaling back on open hours, menus, or product ranges might seem like viable solutions, they can result in missed revenue opportunities.
  

All of these approaches come with their own risks, with many businesses using a mix of all three.

How Temper can help‍

There are solutions to effectively manage personnel expenses without sacrificing quality. Comparing the benefits and costs of different staffing options can reveal interesting insights.

Take, for example, a direct hire earning the increased minimum wage and working 40 hours a week - the employer's average cost will amount to £14.08 per hour, factoring in all additional contributions required beyond the hourly wage. However, a direct hire restricts your ability to adjust to market changes and respond to evolving conditions effectively.

Staffing agencies have long been the go-to for businesses needing temporary people without the commitment and costs of a full-time hire. However, the typical 15% fee charged by agencies hits your bottom line and, in today's workforce, the new generation of workers increasingly seek more flexible work setups that empower them with better control over their schedules - mirroring the needs of businesses. 

This is why more flexible alternatives are making their advances. Temper, a platform for flexible work, already supports thousands of businesses by offering a future-proof flexible workforce with skilled, freelance professionals you can rely on. Including a straightforward and transparent pricing model from £15 per hour, with no hidden costs and without any increase after April 2024. Read more on how Temper can help your business reduce overheads, without compromises: 

Fully flexible shift length

Shifts can be as long or as short as you want on Temper. We frequently see shifts of just 60-90 minutes, to cover the lunchtime rush. You only need to pay for staffing precisely when required, and only for the actual time worked on-shift, down to the nearest minute.

All freelancers are fully insured 

Everyone who finds work through Temper is covered for liability, accidents and no-shows, giving total peace of mind for both freelancers and clients. All these benefits are included in Temper's total cost, ensuring transparency and preventing any unexpected spikes in expenses. 

Transparent pricing guaranteed

Temper presents a refreshingly straightforward pricing model: a minimum hourly rate of £12 plus a £3 platform fee, meaning you pay £15 per hour worked, with no hidden costs. This hourly rate directly benefits the freelancers and not the platform, who manage their own expenses and taxes with our support. By eliminating the percentage-based usage fees of staffing agencies, our transparent approach offers a more predictable and cost-effective solution. This enables businesses to invest in quality while motivating workers. Find out more about pricing at Temper.

No change to our pricing in April: As our minimum rate is £12, neither our hourly rate for freelancers nor our platform fee will change in April.

Stay flexible with Temper

When you partner with Temper, you can keep your workforce flexible and customer satisfaction high, even with the minimum wage increase. Our platform gives you the tools to tap into a vast pool of skilled professionals ready to fill gaps, ensure continuity, and maintain the highest service standards that define your business. Find out more about how Temper works.

Discover more about how Temper can seamlessly integrate into your staffing strategies by signing up to our platform, or reach out to our dedicated team for a chat, via a demo.

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