Brexit numbers already impacting and pointing to worse to come for hospitality
With Brexit now less than thirty five days away, and still no sign from the government of how Brexit will be executed, one thing is for sure. EU nationals in the months and years ahead will be taking up fewer of the job vacancies in hospitality.
By any calculation the numbers from the outcome of current government policy point to an impending disaster for the UK hospitality industry.
Present Tense – This is no longer forecasted opinion; evidence of the impact of Brexit and the government’s immigration white paper is already being reported.
Workforce shortages causing reduced profitability – Millennium & Copthorne announce Brexit workforce woes and profits down, a sign of things to come…
Increased wages increasing costs – M Restaurants implements £10 per hour ‘Brexit Insurance’ minimum wage for all
The Problem Numbers
The government’s immigration white paper post Brexit will set two key rules in place for EU nationals who want to work in the UK hospitality industry.
- EU nationals will need to have secured a job prior to entering the UK with a minimum salary level of £30,000 in order to stay in the UK for more than twelve months.
- EU nationals that want to enter the UK and work that have not secured a job with a minimum salary level of £30,000 can only apply to stay and work for twelve months. They will then be required to leave after 12 months, and unable to re-apply for entry back into the UK for a further 12 months.
There are too many implications here to address in one attempt, but the most poignant fact is, the UK hospitality industry is currently totally reliant upon EU nationals in its workforce.
Between 12 and 24% of the people working in hospitality in the UK currently are EU nationals. There are regional variations, with 75% of waiters and waitresses in London for example being EU nationals.
In pure and simple numbers, the hospitality industry employs circa three million people. So, between 400 and 700 thousand people working in hospitality are EU nationals.
The scale of the impact on our industry over the coming years is therefore immense. Most EU nationals working in hospitality in the UK work below the £30,000 immigration white paper threshold.
Findings from a recent online YouGov survey of more than 1,000 GB hospitality employees show that the UK hospitality sector has a staff retention rate of 70%, which is well below the national average of 85% across all industries. So, in rough terms in the next twelve months 30% of between 400 and 700 thousand EU nationals working in hospitality will need replacing. That is between 90 and 210 thousand people. Through Brexit and the immigration white paper, barriers to entry to the UK are being put up, where are 90 to 210 thousand new people to work in hospitality going to come from?
The Wider UK Workforce Numbers
The Office for National Statistics in its most recent January 2019 report on employment in the UK shows – that employment is at its highest since comparable records began in 1971 and that unemployment is at its lowest since 1975. Job vacancies are also at an all-time high giving the lowest number of job seekers more options than ever before.
The Education Numbers
The number of higher education students who enrolled in Hospitality related courses has remained relatively constant over the past five years. Apprenticeships are similar but varies year on year more than higher education. The volume of people entering into the workplace hospitality from education has also remained relatively constant over the past five years.
Clearly neither the wider workforce pool, or education as potential sources of a solution in terms of the sheer volume of people required to work in hospitality is even close to sufficient.
The Potential Solution Numbers
What is being done, and what more could be done?
The Clink – the initiative that trains prisoners to work in hospitality, here’s what was achieved in 2018.
Each new prison place costs £119,000 and that the annual average cost for each prisoner exceeds £40,000. In 2018 78 Clink graduates were placed into employment, not claiming benefits and contributing to the economy. The government wouldn’t seem to have to do to much maths to justify funding The Clink to open in every prison in the UK. It would of course take investment, spending money on training and rehabilitating prisoners where there is proven long term evidence that it works, rather than continuing to pay incarcerate them.
The Foxes Academy – provide training for young people with learning disabilities to prepare for and enter a career in hospitality. Minister for Disabled People, Health and Work, Sarah Newton, said: “We want to see one million more disabled people in work by 2027, and it’s crucial that the hospitality industry is not missing out on the skills, talents and personal qualities disabled people can bring to the workplace.”
This is viable and will contribute significantly if the government see their stated intentions through. There are also many other similar training providers where again the evidence is that investing in disabled people to enter the workplace produces a good return on investment for the employer and reduces support funding from government.
Hospitality Works 2019 – Industry trade bodies The Springboard Charity, UKHospitality and the British Beer and Pub Association all work with the Government Department for Work and Pensions to showcase the great career opportunities available across hospitality.
Launched earlier this month Hospitality Works 2019 is a three-week campaign, which includes a series of hospitality events throughout the UK. It brings together leading employers to promote awareness of the hospitality sector as a viable career option, to try and increase the number of people moving into hospitality jobs and raise aspirations within the sector.
A great campaign that gets results, should three weeks become a twelve month continuous program?
Beacons of light – As our function is to report on the hospitality and catering industry we often come across people and businesses that act as beacons of light, they set an example for others to follow.
Thankfully there are many and in all cases our experience of engaging with them is that they employ good people. People who know their job and do it well. People from all over the globe.
These businesses will suffer least as their staff turnover will be lowest, the example to follow as already said.
What is needed?
The impact on our industry, where we already suffer from acute people and skills shortages, from current government policy reducing the available workforce pool further will see many businesses go out of business. Restaurants, hotels, pubs, bars, coffee shops and every hospitality provider without sufficient human resources to operate cannot open. The supply chain of suppliers to these businesses will no longer be required, the effect will compound through the supply chain.
The only solution it seems to us is a 180 degree about turn by the government on its current immigration policy. Open the doors up and let EU nationals and people from all over the world come and work in the UK. As a nation the UK can trade independently of formal ties with the EU and encourage EU nationals to work and contribute to the UK society, culture and economy.
The government by maintaining their current course can only make the already acute people and skills shortages across our industry even worse. Over time the problem can only compound.
History proves that the UK economy and society has always benefited from immigration, it adds diversity and enriches our lives. Brexit can be executed without closing our doors to people who want to work and live in the UK and contribute to being part of a better society.