Hotel group leads the way in granting London living wage to hospitality staff

Living wage campaigners are celebrating today after Intercontinental Hotels Group announced the wages of 850 members of staff will now start at £8.30 an hour.

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Matthew Pennycook is a Senior Research and Policy Analyst at the Resolution Foundation

Living wage campaigners are celebrating this week after Intercontinental Hotels Group (IHG) announced the wages of 850 members of staff will now start at £8.30 an hour.

Holiday-Inn-SeattleIHG, the company behind Holiday Inn and Intercontinental Hotels, announced yesterday it is going to pay the London living wage in eight managed hotels across the capital.

The result is that 850 low-paid IHG staff will now be paid at least £8.30 an hour, far above the minimum wage of £6.08 and at a level that should sustain a minimum standard of living.

In the world of low-paid work, this is a big deal. Despite the traction that the concept of a living wage has gained across the political spectrum in recent years, most employers that have taken the plunge have been high-profile banks or legal firms with a very small proportion of low paid roles on their books.

IHG is perhaps the first serious convert from a recurrent business model that  was formerly reliant on relatively low skilled, low paid work. It shows that sustained pressure from campaigners, the public and workers themselves – last week a chambermaid went on record as being paid £3 an hour to clean £150-a-night rooms – does pay off.

Whatever the precise rationale for the decision (how long could the official hotel partner of the first living wage Olympics remained a non-living wage employer?) there is no doubt it is a big scalp. And it’s also an important test case. 


See also:

Will consumers support Living Wage products and services? 10 May 2012


It’s striking that this first big move has come in the hospitality industry, a sector in which over 50 per cent of staff are currently paid below the living wage.  It’s also just the kind of sector that sceptics hold up as particularly vulnerable to job losses or price hikes as a result of paying higher wages. After all, aren’t hotel maids and room attendants necessarily low-paid roles?

As yesterday’s announcement confirms, the answer is no – they don’t have to be.  In fact, in recent years, a growing body of research has shown that the design of low paid jobs varies surprisingly in different countries and even within sectors in the same country. 

It turns out that companies can design most roles to be either low paid and low cost or higher paid and more productive. In Las Vegas, to give one example, unions have been hugely successful in recent years in lobbying for higher pay for hotel cleaners.  One result is that Las Vegas hotel bathrooms are now built with rounded corners that are quicker to clean.

Intercontinental have said they’ll move to the living wage in phases and it will be interesting to see how they adapt their business model as they do so. If they’re successful, and make the move without job losses or reducing hours worked, it will reinforce the findings of a recent report from the Resolution Foundation and the IPPR which argued that even in the major low-wage sectors of retail and hospitality, large employers can make progress toward a living wage.

Whatever form that progress takes, IHG’s decision will place  pressure on other large low-wage employers to follow suit.


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