Chancellor George Osborne has today (8 July) unveiled plans for a new compulsory living wage in the first Conservative government Budget for almost 20 years.

From April 2016, the Living Wage will come into effect in place of the minimum wage, which is currently £6.50 per hour. The Living Wage – intended to cover significant cuts being made to tax credits for low income workers – will start at £7.20 per hour for over 25s, gradually rising to £9 per hour in 2020.

The announcement will have big implications for the leisure industry – both in terms of revenue opportunities and staff costs – where the majority of entry level workers start their careers on minimum wage.

For lifeguards, receptionists, junior personal trainers and a number of hospitality workers, the announcement heralds the prospect of a 38 per cent pay rise by 2020. Operators meanwhile, must contemplate how to cover a rapidly inflating wage bill.

“Increased costs for operators who rely on minimum wage staff, will have to be budgeted for, but the industry must embrace this increase with a positive attitude, to ensure we continue to build our reputation as a credible sector which creates good jobs and offers solid employment prospects,” said Leisure Media CEO Liz Terry.

“The increase in personal allowances and the minimum wage is good news for the industry, as it gives people more disposable income to enjoy their leisure time – assuming inflation and interest rates remain stable.”

Terry also criticised the “further undermining of student grants,” which she flagged as being at odds with the government’s stated aim of creating a competitive economy based on increased skills. She said the move will push more training costs onto employers and employees and could jeopardise training initiatives, as has been warned in a recent report.

Meanwhile, Steven Ward – executive director of physical activity sector body ukactive – said the move to implement a Living Wage could help to address inequality in society. He acknowledges it will present challenges to leisure employers, but believes they have enough time to overcome them.

“The government is seeking to do away with the enormous cost of working tax credits which is seen as government subsidising low wages by employers. We cannot pretend, however, that this change may not hurt employers as it certainly will,” Ward told Leisure Opportunities.

“With the timelines communicated, employers have time to plan their workforce and labour strategy, and make sure that they have a staffing structure that is affordable and delivers high quality services to members.”