Can’t get the staff? Try paying more

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ViewsJune 8th, 2021

As the economy has opened up over the last few weeks, some industries have been beset by something most analysts did not anticipate – labour shortages. Victoria Winckler, Director of the Bevan Foundation, asks what should be done. 

Restaurants, cafés and pubs are reporting they cannot get staff. It’s not just food a drink – road hauliers are reporting that they cannot get drivers, and there are warnings about shortages in retail too. This is something many analysts – including the Bevan Foundation – had not anticipated. So what’s going on and what should be done?

Some businesses are blaming Brexit. 

The sectors with recruitment problems were the ones with relatively high levels of migrant workers.  The Wales Centre for Public Policy’s work for the Welsh Government estimated that around one in ten workers in hospitality in Wales is not UK-born, about half of whom are EU migrants.  It’s not clear how many migrants have returned to their country of origin, but any reduction in the number of people looking for work in the sector will inevitably have had an impact.

But pay and conditions matter too

I suspect that there are other reasons for the shortages as well, which rest with the conditions of work in the sector itself.  Our analysis of conditions in the hospitality sector does not make for comfortable reading. In 2019, median weekly wages were well below the Welsh average at £167.40 in food and drink and £286.60 in accommodation services. Hourly rates were also amongst the lowest on offer.

We heard of workers having vague contracts or no contracts at all, of workers being paid below the legal minimum wage, of working irregular and very long hours sometimes without breaks, and of being routinely abused and harassed by customers.  Workers were stressed and concerned about Covid-19 safety on their return, and lived in fear of losing their jobs if they spoke out.

We know that not all businesses use practices like this. But they are relatively common and are hardly the best ways to recruit or retain staff. 

Furlough has played a part

Understandably, hospitality businesses have been amongst the most likely to put their workers on furlough. But with the loss of tips and most workers only getting 80% of pay, many have really struggled financially while they’ve been laid off.  It’s reasonable to expect a fair number of hospitality staff have found other – and possibly better – jobs in the last year.

What should be done?

The obvious answer to a labour shortage is to improve pay and conditions to attract workers from other jobs and to ease job entry e.g. with suitable training. Yes this may mean prices in bars and restaurants have to increase, but if it means workers can afford the basics so be it. 

The Welsh Government’s commitment to increasing fairness at work is therefore a welcome step. However, with powers over employment being reserved to the UK Government, it must rely on its powers over equality, education and training, health and economic development to try to reform the lower-paid end labour market. Our forthcoming paper will set out some ways in which the Welsh Government can and should go further than the social partnership bill. 

For now, let’s hope that sheer market pressures mean that the hospitality industry (and others) ends its generally poor treatment of workers.

Victoria Winckler is Director of the Bevan Foundation 

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