Should yard owners increase their costs?

The Equestrian Employers Association (EEA) looks at increasing overheads for equestrian businesses and the impact of COVID-19 on the industry.

On April 1 2020 the National Living Wage (for over 25 year olds) increased by 6.2% from £8.21 to £8.72, while 21-24 year olds saw a 6.5% increase from £7.70 to £8.20.

In employer terms this means that employees receiving the National Minimum Wage (NMW) aged 25 years and were legally due a pay increase of £1325 per annum. Multiply that by the number of employees and many yards are seeing a significant increase in wages over a 12 month period.

Despite the increase in costs a survey conducted by the British Grooms Association (BGA) showed that 57% of respondents who were in an employed position were not paid the NMW, yet 89% of employers are aware of the NMW.

With the NMW being a clear legal requirement, this begs the question... why are employers choosing to be non-compliant and putting themselves and their businesses at risk? Is this a lack of employer education, or is this because there is a lack of income and businesses cannot afford to pay their staff, and themselves, properly?

The eyes of the HMRC are currently on the equestrian industry with regular reports of riders and business owners receiving large fines relating to illegal employment issues. As an owner, being associated with non-compliance can have other additional detrimental effects.

Is it time for business owners to look at their models and to run it as one would expect from any other industry? Would this result in an increase in service costs such as livery, training and coaching, or even a decrease in expenditure for products such as bedding, forage and feed by ensuring the best deals possible?

As a client would you be happy to see an annual increase of 5% to cover the rise in costs?

In addition, the Coronavirus pandemic has seen many businesses suffer a significant reduction of turnover. Services such as breaking, schooling, competition livery, sales of horses and coaching have all been impacted.

The Coronavirus Impact Survey, run by the EEA and the BGA in collaboration with British Equestrian, found that 89% of all businesses that responded felt that coronavirus had impacted their business in some way.

The report found that livery and competition yards were less likely to furlough staff due to the welfare needs of the horses in their care to deliver a similar service, but with reduced income.

Many business owners themselves will have also been affected by the pandemic and as we are enjoying the remaining 2020 season it also opens up the question – how will this change the landscape for riders and business owners in 2021?

Article written by the EEA for the Event Horse Owners Association September 2020.