£9 minimum wage – good for the park industry?

MoneyOver the next five years, the minimum wage will rise to £9 an hour, the UK government has said.

Given the tendency for most UK theme parks to pay the minimum wage, how will such a significant rise affect the industry?

The unveiled figure represents a rise of more than 38% on the current minimum hourly rate of £6.50.

However, that figure applies to those aged 21 years and over only. The figure is £5.13 for 18-to-20-year-olds, and £3.79 for under 18s.

The fact that lower rates of pay can be given to younger people makes those age groups particularly appealing to companies.

Notice the significant numbers of young people working at theme parks – it is no coincidence.

‘Job losses’

At first glance, the minimum wage rising to £9 by 2020 – which will be something like 6% per year – seems to be a big ask of employers.

Alton Towers Staff Oblivion

Merlin’s Nick Varney described the last minimum wage rise, to £6.50, as “bearable”

This is particularly the case with theme and amusement parks, where many jobs are paid at the minimum wage, and a majority certainly below the forthcoming £9 per hour figure.

The British Hospitality Association (BHA) has said that although changes to corporation tax and employment allowances were also announce in Wednesday’s government budget, they would not be enough to head off job losses from a sudden wage rise.

A BHA spokeswoman told the Financial Times that they were “very surprised” the chancellor made the announcement of the wage rise without consultation.

Merlin Entertainments chief executive Nick Varney, whose company operates Alton Towers and Thorpe Park among many others, has been an outspoken critic of aspects of the minimum wage in the past.

In 2014 he said spoke out against how the minimum wage was the same in all parts of the UK irrespective of the varying cost of living in different areas.

He said: “To apply the London minimum wage to people working in Blackpool is just ridiculous.”

At that time, he described the 2014 rise to £6.50 as being “bearable” for Merlin, and he is likely to be a considerable critic of the new rises outlined by George Osborne on Wednesday.

Young workers

It is worth highlighting, that the new £9 minimum level of pay will only be paid to those aged 25 and over.

George Osbourne unveiled the changes to the minimum wage in Wednesday's government budget

George Osborne unveiled the changes in Wednesday’s government budget

This will likely mean that the desirable age group for park employers now broadens slightly, moving from the under 21s, to the under 25s – although it is not clear by how much the minimum wage for that age group will rise by 2020.

With the majority of work seasonal – contracts lasting for less than a year – it is relatively easy to offload any over 24s not to come back if they would have to return on a higher wage.

While it may be a sceptical view that theme parks go for young people merely because they are cheaper, the numbers in certain roles – requiring less experience – are compelling.

However, when you consider the enthusiasm, energy and the natural theme park resonance that many young people have, their presence can hardly be described as a bad thing.

Nevertheless, with Merlin shareholder pressure, and tighter margins at the smaller independent parks, the method of mitigation against this enforced pay rise could well be an even greater focus on recruiting young people – and the question of exploitation is a valid one.