04 May Post-pandemic worker shortage puts Brexit to the test
Cristian quit his job at an upmarket hotel in Cambridgeshire in July. The 34-year-old from Romania had climbed the ladder from waiter to operations manager during his 16 years working in the hospitality industry.
He now works 30-hour weeks for a local supermarket as an assistant manager and delivers parcels on Friday and Sunday to make ends meet.
“The world of hospitality has changed a lot. It’s not attractive anymore,” says the father-of-one, who asked for his surname not to be used. “It’s just not worth it.”
Cristian cannot name the single root cause of his dissatisfaction with working in the sector, but 24-hour work shifts, a lack of a pay progression, and understaffing have all been contributing factors.
However, it was the uncertainty around the future for pubs, bars and restaurants fuelled by the pandemic that proved the last straw.
Cristian is among reams of workers who have abandoned the hospitality industry during the Covid crisis in favour of better-paid, more secure jobs.
Thousands more were made redundant, many of whom were snapped up by supermarket chains to help them cope with the surge in home deliveries. Britain’s largest supermarkets have hired more than 130,000 new staff since the pandemic, albeit a significant proportion of these are on a temporary basis. More than 350,000 jobs were lost in hospitality over the past year.
A significant number of Eastern Europeans who pulled pints or waited tables in the UK have returned to their home country, pubs and restaurant bosses say.
Meanwhile, prospective foreign workers are shunning the UK because of tighter visa rules and higher entry costs post-Brexit, according to industry chiefs. After holding fairly steady throughout last year, searches for UK roles among EU jobseekers dropped to a post-referendum low in 2021. A total of 5m Britons are still on furlough.
All this threatens to capsize the gradual reopening of hospitality, with major chains facing a recruitment crisis as consumer confidence picks up and indoor service resumes. Pizza Express is seeking 1,000 staff to join its 360 UK sites ahead of May 17, while restaurant tycoon Richard Caring’s Bill’s is advertising vacancies for up to 140 roles.
“The struggle to place people in hospitality isn’t anecdotal evidence, it’s the reality,” says Chris Slay of recruiter Skills Provision.
Before the crisis, he used to hire 5,000 people from Eastern Europe to work in hospitality in the UK in a good year. In 2020, that number plunged to just 20.
About 50,000 people left Britain entirely in the three months after the virus first struck, while populations in some Eastern European countries rose.
One study by analysts at the Economic Statistics Centre of Excellence estimated that London’s population may have fallen 700,000 during the pandemic.
Pawel Adrjan, an economist at jobs site Indeed, says there has been a “big jump” in demand for hospitality workers over recent weeks, as part of a general trend towards sectors that are preparing to reopen or have already done so.
However, vacancies in catering and hospitality remain about a fifth below pre-pandemic levels despite a recent resurgence, according to the latest data compiled by the Office for National Statistics.
Retail has seen a similar but less marked climb, but is closer to normality at 88pc of pre-Covid rates.
Bosses of retailers including Space NK, Ted Baker and Moonpig say the labour shortages have not spread to their operations.
“We used furlough specifically so that people would retain their jobs and we could bring them back as we reopened stores,” says Rachel Osborne, chief executive of Ted Baker.
In hospitality, bosses fear that labour shortages will only become more acute.
Rob Pitcher, chief executive of Revolution Bars, let go of 1,000 staff – a third of his workforce – during the crisis. He says: “Because we’ve only got a third of our estate open and we’re only able to trade outside, it’s not causing us too many problems, but we are anticipating quite a major issue [with jobs] as we open the rest of the estate.”
There is an element of nervousness around door security staff. He expects to have to fill more gaps in the South East and in Liverpool, Manchester and Leeds where the company is seeing greater signs of “distress”.
Alasdair Murdoch, chief executive of Burger King, agrees it is an issue which will play out as the economy reopens further. “We haven’t struggled to find people, I can see that we might at some point in time but we’re not at the moment,” he says.
Adding further pressure to labour shortages is a reluctance among younger people to return to work or even join the industry.
“One of the things that we’re seeing is concern among parents about their sons and daughters coming back to work,” says Revolution Bars’ boss Pitcher.
“Invariably, the Government’s messaging and the portrayal of hospitality as a real issue from a Covid infection point of view is definitely having an impact.”
Jon-Luke Davenport, a 23-year-old finance student, started looking for a part-time job in October to pay the bills. He says that before the pandemic, a side gig in retail or hospitality would have been at the top of his list.
“I wouldn’t go back into that sort of work now,” he says. He has bagged a customer service role for a cryptocurrency exchange.
“You have no freedom when you are working in a restaurant. I would be working for a similar level of pay. The trade-off is between how much I get paid and the free time I get working remotely.”
Peter Borg-Neal, chairman of Oakman Inns, a pub chain with sites located across the Midlands, Home Counties, Essex and South East, says that recruiting for back of house roles has been harder than filling customer-facing positions. “You can’t get new people anymore,” he says. “It’s all well and good the Government saying, ‘we need to be retraining people and doing more apprenticeships’ but getting enough people who want to come into our industry, that will be harder.
“We’re fighting IT companies who are taking on apprentices. We have been reliant in the past on the EU and there appears to be quite a gap.”
Under new immigration rules, sponsorship for an overseas worker could cost up to £10,000 for large companies. For a medium size firm, for example, the visa-processing fee alone is £610, according to law firm Silk Route Legal.
“If you are an engineer you can come in, if you are a doctor you can come in, that’s great, but the economy also needs a wide range of people. You have got to make sure they can get in,” adds Borg-Neal.
Skills Provision’s Slay says the pandemic should force companies to rethink how much they pay staff.
“Businesses are not living in the real world, they’re living in a world that is gone,” he says. “In 2021, you can’t get away with paying people minimum wage, you just won’t get anybody.”
Industry chiefs reject the suggestion that salaries are not attractive enough. They argue that when tips and gratuities are taken into account, hospitality is not the low-paying employer it is cast as. Mark Selby, chief executive of Wahaca, says that many of the recruitment wounds his peers are experiencing are self-inflicted. The chain has filled most of the 60-odd new roles it has been hiring ahead of reopening.
“We made people redundant, but it wasn’t ‘death-by-email’,” he says. “We’ve tried to have one-on-ones and make people feel respected.”
Sustained hiring problems could, in extremis, hurt Britain’s recovery, warns Tony Wilson from the Institute of Employment Studies – making it more difficult for businesses to ride the wave of pent-up demand that reopenings are expected to unleash.
“They might find themselves having to pay more, they might find they’ve got skill shortages,” he says. “All of that ultimately could end up holding back the strength of the recovery.”
However, Wilson says that while companies might have to work harder to hire staff, there is enough slack in the labour market that these problems should be temporary. He says: “There’s no excuse really for employers not being able to fill these sorts of jobs, given the levels of worklessness.”