Labour Costs
Expenses related to employees: wages, salaries, benefits, training, recruitment, compliance.
Formula
Labour Costs = Wages + Salaries + NI Contributions + Benefits + Training + Recruitment Costs
Real World
In 2023, Sainsbury's announced plans to cut head-office roles to reduce labour costs after its wage bill rose sharply following the National Living Wage increase.
Exam Focus
When calculating or discussing labour costs, include non-wage costs (NI, pensions, recruitment) — answers that only mention wages risk losing application marks.
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