Staff shortages are causing a crisis in the hospitality sector. While consumer demand is there, restaurants, hotels, pubs and cafes are struggling to recover from the pandemic because they are unable to recruit and retain enough staff.

The importance of hospitality to the UK economy

The economy seems to be bouncing back since coronavirus restrictions were lifted. And it’s clear that the hospitality sector has a key role to play in its recovery.

Office for National Statistics (ONS) data showed that the UK economy grew by 4.8% in the second quarter of 2021. Analysis from the UKHospitality Quarterly Tracker, produced by CGA, indicates that the hospitality sector was responsible for 40% of the UK’s total economic growth from Q1 to Q2. 

The Opentable research statistics show the significant growth in the number of seated diners since hospitality businesses reopened back in May. 

And, while the weekly statistics produced by the ONS show retail footfall in the week to 14 August was only 82% of its 2019 level, in the same period seated-diners were at 133% of their 2019 equivalent.

These figures clearly show the importance of the hospitality sector to the UK economy, even in a severely restricted state during the second quarter of this year. However, they also demonstrate its real potential to help power a wider economic recovery now trading restrictions have finally been eased after almost 18 months.

A new threat for the hospitality sector

There are a number of calls for continuing Government support, including the continuation of the temporary 5% VAT rate and favourable status for business rates on hospitality premises. However, there is increasing awareness of a rather more striking issue that threatens the operations of the industry at large. 

Before the Covid-19 pandemic, the UK hospitality sector employed 3.2million people and was the third largest private sector employer. A recent survey shows that there have been 500,000 job losses across the sector.

In our Devon village, there are three pubs and a club. Now, every one of them is trying to recruit for their hospitality teams. Some are closing for shifts as they do not have enough staff to open fully. Chefs in the area are allegedly being poached for huge salaries to move from one outlet to another. It’s the same across most of the UK. Some say that the industry has brought this upon itself by condoning long working hours and minimum pay, and by the short-term seasonality of its operations, especially in holiday hotspots. 

Some may have sympathy with this view. However, the hospitality and tourism industry has always provided cash, experience and temporary work for many younger people in their local area while they are still in education or are figuring out what to do next. As an employer, we have been grateful for the skills and attitudes that many of our joiners have learned while dealing with the public across bars and behind kitchen counters. To my mind there are few better training grounds for a young person than a busy pub or restaurant.

What is causing the hospitality recruitment crisis?

The effects of both the pandemic and Brexit have been a double-whammy for the hospitality sector. When we left the EU, many European workers went back to their home countries with no desire to return to what many said they felt was an unwelcoming UK. 

While there is some disagreement on the numbers of European workers leaving the UK, a report from the Economic Statistics Centre of Excellence suggests a million people left the country in 12 months between 2019 and 2020. Clearly not all of these people will have worked in the hospitality sector but we are feeling the effect of this loss.

Why is the sector struggling to recruit new staff?

British workers are filling some of the gaps. Findings by software provider Fourth report that in the first quarter of this year, Britons made up the majority of those taking up new hospitality roles. This is a marked shift from 2019, when EU workers were the leading group.

Recruitment is not a new issue for hospitality.  New figures from the Office for National Statistics reveal that job vacancies in the industry were already consistently at high levels before the UK went into its first lockdown in March 2020. In fact, since 2017, there have consistently been 90,000 or more vacancies in the industry – a significant number. And the above Fourth report also shows that headcount in the sector is still some 20% lower than June 2020. Surprisingly, the pub sector fares much better in terms of headcount than the hotel and restaurant sectors perhaps due to the slightly less formal recruitment practices.

So, Covid and the effects of Brexit might be highlighting worker shortages in the short-term but are there other, longer-term issues affecting the industry?

Some in the sector say a major contributor to the staffing problem could be the very nature of the hospitality industry. Does its perceived culture of very long working-hours and low wages put applicants off and drive people away?

It seems likely that the ‘big bang’ re-opening of the economy and the consequent sudden demand for staff across many sectors is a trigger for the crisis. We know that, when there is a degree of choice, comparisons are made which would not normally be available. Perhaps time and the reduction in choice as jobs get filled will reduce the demand. 

How can hospitality businesses be more attractive employers?

The hospitality sector may also be able to shift the dial and ensure that their outlets are attractive places to work. For example, operating an honest and open policy with respect to tips that ensures the whole team benefit on a timely basis could encourage a more inclusive environment with a stronger team ethos. And is it also time to end to the trend of businesses not paying tips to staff when customers pay these by card? 

Providing good working conditions, sensible uniforms and staff meals where appropriate and creating a culture which encourages teamwork and makes the outlet attractive to both employees and customers could go a long way. 

Certainly, the transformation of business models though the adoption of technology has had a significant impact on the sector. All of our village pubs have some combination of electronic booking,  menus or app-based ordering which can change the staffing requirements and help to make customers feel safe in previously high-touch environments. Of course, utilising this technology can also help to cut errors, gather data on order patterns and therefore help with purchasing decisions and economic order quantities. They also allow the business to feed data directly into their accounting and payroll systems for further processing. Coupled with digital scheduling and time-recording software, this allows businesses to make more sensitive staffing decisions based on demand for tables and perceived requirements.

Given the end of the school holidays and the normal seasonal change in demand from the coming autumn season, the recruitment issue will probably soften. However, now is the time to review systems, processes and identify possible team members for the busy Christmas period to ensure that as demand ramps up again, the resources are there to support it.

By Jon Stacey, Partner

For further advice on this matter, please do not hesitate to contact me or your local Thomas Westcott office.