An analysis of the most pressing concerns based on insights from 1,000 UK business leaders.
Author: Mark Eade
When, last year, even Michelin star restaurants were unable to offer both lunch and dinner seatings due to lack of staff,1 it served as a stark reminder of the significant staff shortages across the hospitality industry. Despite the sector ‘opening its doors’ again after the COVID-19 disruption, there was simply not enough staff to welcome people back through them.
For customers, the confidence to dine out, book hotel stays and embrace social activities has returned. But, for many employees working in the hospitality and leisure industry, the pandemic brought permanent career and/or lifestyle changes. This has resulted in a talent shortage that has been difficult to fix and there are a number of reasons for this.
Lack of training
The restrictions that came with a global pandemic meant there was a lack of training of newly-qualified staff. On-the-job training was largely impossible during the height of the pandemic, with lockdowns denying new employees the chance to progress, and strict health and safety measures once lockdowns were lifted making the job even more challenging. With 35% of hospitality workers aged 24 and under,2 the sector often provides a first job for many young people. However, without the opportunity to advance their career, combined with uncertainty about having a job to come back to after furlough, many young people decided to seek work outside of the sector.
Loss of workers from overseas
The proportion of EU workers in the UK hospitality industry is now at its lowest level since 2019.3 Many EU nationals working in the UK before the end of the Brexit transition period moved back to their country of origin soon after the pandemic began and have not returned. According to data from the Office for National Statistics (ONS), for workers in hospitality, this number is almost 300,000. With free movement of people now replaced by a new points-based immigration system, it seems unlikely that we will see these workers return any time soon. If they do come back to the UK, businesses will face increased regulations around employing them.
Vacancies in the hospitality sector have risen by 44,000 (34%) compared to last year.4
EU employees now account for 28% of the hospitality workforce, down from 42% before the pandemic.5
Staff taking early retirement
While young people may be seen as the ‘heartbeat’ of the hospitality industry, let’s not forget the importance of older workers—many of whom have years of experience. The pandemic led large numbers of these employees to make the decision to retire earlier than they had perhaps intended, taking their skills with them. Overall, there are around one million fewer workers in the UK labour market than before the pandemic,6 and of those, three quarters are people who chose to retire early. However, an ONS survey found that about one-third of the over 50s who did this would consider returning to work,7 with half of these motivated by financial reasons as families face the ongoing cost-of-living crisis.
Challenges throughout the supply chain
Of course, the hospitality sector relies on food and drink manufacturers, who are also struggling to fill their vacancies. This sector is reporting higher vacancy rates than the average UK business and this is accelerating at increasing pace,8 with 6.3 vacancies per 100 jobs in Q2—up from 5.2 in Q1. The challenge is across all types of roles, from production operatives and drivers, to engineering and IT roles to specialist roles such as butchers and flavourists.
It’s not just the supply of talent that’s creating challenges either, but also the product supply chain, due to the ‘perfect storm’ of global pressures such as COVID-19, Brexit and the war in Ukraine. This is making it difficult for some businesses to make decisions about their supply chains, both in terms of controlling cost and getting the products they need.
The outlook
With many EU nationals no longer willing or able to work in the UK, hospitality businesses will continue to experience recruitment challenges. This can create a catch-22 situation, as without the necessary staff, these businesses cannot operate at full capacity, making their financial recovery from the pandemic more difficult, and squeezing their recruitment and training budgets further. On the upside, we may see a return of older workers coming back to the industry as well as greater investment in training and development of staff at all levels.
Whatever the future looks like, Gallagher’s Hospitality and Leisure team is committed to helping businesses navigate the challenges ahead. If you would like to talk to us about any part of your risk management programme, from people risk to managing your supply chain risk, please get in touch. We can also work with you to review your insurance programme with a view to lowering your total cost of risk.
