Category Archives: Hospitality

UK post-Brexit migration and pandemic effects: how unexpected was the current shortage crisis?

Researchers Alberti, Morganti, Forde, Ciupijus, Cutter, Graham, Bessa and Dolezalova present their new ESRC grant “Labour mobility in transition: a multi-actor study of the re-regulation of migrant work in ‘low-skilled’ sectors” (LIMITS)  while reflecting on the current shortages in hospitality and transport/logistics)

When our team of researchers from across CERIC, LUBS and the Global Food and Environment Institute at the University of Leeds came together in 2020 to design a project on the overlapping effects of post-Brexit migration policy and the Covid-19 pandemic on the UK labour market, we identified some critical sectors for investigation. Warehousing, Food Processing, Hospitality and Social Care were selected as key “low skilled” sectors that had historically relied on migrant labour and where free movement especially from the new Accession countries of the EU, provided the ‘flexible’ workforce sought after by many employers. We anticipated that these were also the sectors where employers might face difficulties in recruiting, since low-skilled migrant workers were being excluded from the new UK ‘Points-Based immigration system’.

However, the severity of the labour shortages the country is now confronting appears exceptional in scale and nature.

Drawing from a range of expertise across the sociology of work and employment, management, and transport studies, our team has now been awarded a 3 year grant from the ESRC to research labour mobility in transition starting from the first of October 2021. In this blog, we look at the crisis in hospitality and logistics, and draw out some insights about the effects of Brexit and COVID-19 on employers’ use of migrant labour.

Hospitality’s labour crisis

What was difficult to predict was the peak in demand for workers in sectors like hospitality immediately after relaxing the social distancing rules. Two main factors play a major role in current labour shortages:  a reluctant local workforce unwilling to return or take new work in a relatively low pay and demanding industry; as well as the unexpected degree of Brexit and Covid -induced Exodus by the EU nationals that have provided key labour and skills to the sector for decades.

According to the Office for National Statistics,  in Hospitality 27 per cent of workers are foreign born while, among EU workers, 11 per cent are found in this sector. Often employed on temporary contracts via staffing agencies (McDowell et al 2009), migrant hospitality workers may be further exploited by employers interested in easy hiring and firing as they are considered more disposable than locals, and willing to accept lower wages and work longer hours- due in turn to their assumed short term earning needs and vulnerability (Ruhs and Anderson 2010). However research has also found that migrants from both within and outside the EU working in hospitality, despite their insecure migration status, succeed at time at quitting precarious jobs in the sector to improve their livelihoods through labour market mobility and transnational mobility (Alberti 2014; McKay 2009).

The period of Brexit and the pandemic has clearly provided the perfect storm for migrants to use their mobility power as it is believed that more than a million EU nationals, actually 1,293,828, have left the UK throughout 2020 according to an original analysis of the LFS by researchers from the Economic Statistic Centre for Excellence.

According to the recruitment company Indeed since 2019 there has been a decrease by 36% in the number of EU migrants who look for work in the UK. In particular 355,000 people have left the hospitality industry since March 2020, about a tenth of the workforce (the Sunday Times June 12, 2021). There have been reports of bosses turning into barmen and waiters, leading the UK hospitality association to lobby the government for introducing a worker visa.

Whether these shortages will exert pressure to improve terms of working conditions and employment practices, including increasing wages and developing training opportunities to make this work more attractive to the local population, remains to be seen. This will depend on the level of tightness and competition  at the bottom end of the labour market and whether those on furlough will return to work in hospitality or look to move to different and possibly better paying, more socially sustainable employment.

The transport and logistics crisis

In transport and logistics, a shortage of Heavy Goods Vehicles (HGV) drivers is already reducing the supply of food to our supermarket shelves. This is another area of ‘essential work’ celebrated by the governments and popular media around the world at the peak of the pandemic, and nonetheless also absent from the existing immigration routes under the Points Based System. Nor these jobs were considered in the review of the so called Shortage Occupation list that, as discussed in our previous CERIC working paper, allows for exceptions to the rules of the salary and skills thresholds inscribed in the new policy.

In a recent letter urging the Government to take action, the Road Haulage Association laid bare the scale of labour shortages. With the total workforce comprising 600,000 drivers, the RHA estimated shortages of over 100,000, with vacancies rising sharply during 2021. Tens of thousands of those are actually EU nationals who moved away from the UK.

There have been a range of causes for the serious shortages in this sector. Border delays caused by the end of free movement of people, goods and services are one key factor, since driver pay is  indifferent to time spent on the road but rather is measured by distance driven. This has discouraged some lorry drivers from returning to work in the UK. Some employers have sought to substitute EU for UK drivers, but have faced backlogs in conducting HGV driver tests during the pandemic and more fundamental challenges in recruiting workers to what is seen as an unattractive sector in terms of working conditions.  Working hours are long, work is physically demanding, and wages remain low, despite some headline increases to attract workers.  While many are retiring, the youth continue to find these jobs unattractive.

Longer term plans and strategies for retraining and recruiting new drivers is seen by many as the only sustainable solution. And yet for the short term the Road Haulage Association insists that: “we are not going to solve this now by training drivers and as such need access to EU and EEA labour”.

Evaluating the UK labour shortages

These two examples of shortage crisis within and across the hospitality and transport/logistics sectors are particularly enlightening of the cascading effects of the overlapping Brexit/Covid crisis on labour recruitment along the supply chains. This  crisis exposes the fragility of the supply chain and its dependency on migrant labour, alongside some of the dysfunctionalities of the post-Brexit regulation of migration for work.

Many aspects of this crisis were perhaps foreseeable and avoidable. Since the beginning of the negotiation over the new Point based skilled for immigration employer representatives have warned the government about the risks of severe shortages, and have demanded  either the inclusion of groups of workers in the Shortage Occupation List or the introduction of temporary visas. Yet, the UK government has made minimal additions  to the list,  after the Review by the Migration Advisory committee in March 21 concerning only a few occupations in the health care sector.

Our research during the elongated Brexit process has already identified some  tipping points in the ‘crisis of labour mobility’ and has argued that limited dialogue within and among the social partners has contributed to the current situation. The current migration policy creates more borders, new bureaucratic barriers for a larger part of the migrant population now tied to work permits, and is arguably operating  counter to the very interests of the business community that Government claim to be willing to serve. On the other hand the introduction of ‘exceptions’ to the Points-Based System by expanding the range of the SOL to include so called low-skilled but ‘essential’ sectors of the economy, proposed by right-wing think tanks such as Bright Blue, further exposes some of the contradiction and tensions in the new system. As highlighted by the Migration Advisory Committee letting employers circumvent the conditionality of the salary threshold  risks to reproduce rather than solve the problem of shortages in these sectors.  

The ways in which migration policy will shape employer strategies will provide a key focus for our project over the next three years. Will employers look to substitute towards a local workforce? Will they look to automate, and what challenges does this create? Will they seek to train and retain staff, and improve wages and working conditions? Our employer  survey, which will be launched towards the end of 2021, and our qualitative research will explore the evolving dialogue between  industry and community stakeholders; the links between recruiting workforce and re-design supply chains with non EU partners; and the employer interest to commit to a more resilient and fairer employment model.

Beyond employers and government responses, what the unions and workers will do on the ground is also of critical importance: will the shortages act as a leverage for increasing wages and the bargaining power of both migrants and local workers? Or will new informal employment practices be adopted by employers already burdened by the uncertainty of a bumpy recovery?

What seems to emerge from the current challenge is that the problem of shortages as a number crisis, may be overcome only when a discussion about the quality of work in these essential if ‘low skilled’ sectors will finally be addressed by social dialogue on migration informed by solid data, and a clear industrial strategy.

Why so-called ‘Barista Visas’ won’t help UK Hospitality Workers

Version 2
Matthew Cole

Home Secretary Amber Rudd has recently introduced the idea of a so-called ‘barista visa’, undoubtedly to militate against the potentially disastrous effects of Brexit for UK businesses. The proposal was suggested by Lord Green, chairman of the right-wing think tank Migration Watch UK, who claimed it would, “kill two birds with one stone” by meeting employer needs while “maintaining links with the EU”. By links, he must have meant links to a highly exploitable workforce with no rights. The ‘barista visa’ would allow young European citizens to migrate to the UK and work in the hospitality industry for up to 2 years; however, it would deny them access to benefits, schooling, housing or any possibility of extending their stay. The proposed visa would be modelled on the Tier 5 (youth mobility scheme) visa, which currently allows 18-to-30-year-olds with at least £1,890 in savings from non-E.U. countries such as Australia, Canada, New Zealand, South Korea, and Taiwan to work in the U.K. for up to 24 months. Despite the government’s optimism, the ‘barista visa’ would not only fail to offer adequate solutions to Brexit, it would exacerbate issues in the industry for both employer and employees.

The hospitality industry (including hotels, bars, cafes and restaurants) makes a significant contribution to the UK economy. The industry added an estimated £57 billion to the economy in 2014, roughly 4% of GDP and it employs around 3 million people in the UK.  Since 2011, it has grown by 13%, more than double the employment growth of the economy overall. Yet in the context of this dramatic growth, working conditions remain poor. Average gross earnings for full-time workers in the hotel industry are the lowest in the UK and the industry has the highest incidence of low-paid workers. Added to this is its dubious status as one of the least unionised sector of the economy.

Today, the hospitality industry is experiencing increasing instability and pressure as a result of Brexit. Britain leaving the EU will no doubt have serious and lasting impacts on the UK labour market and workers rights. According to the ONS, E.U. nationals make up 7% (2.2 million) of Britain’s total labour market of 30.3 million. However, some industries will be more affected than others and the hospitality – with over 60,000 workers per annum working in this sector – is likely to be one of those feeling the impact of the referendum result. A report by KPMG indicates that hospitality is the largest business sector employer of EU nationals as a proportion of total workforce. Hotels and restaurants employ the highest percentage of EU migrants with certain roles such as waiters and waitresses (75.3% EU nationals), housekeeping staff and chefs representing a particularly high portion of migrants. Based on current projections, the absence of an annual inflow of new EU migrants into the hospitality industry each year would generate a significant recruitment gap, which would increase over time.

Despite it’s moniker the ‘barista visa’ scheme would fail from a business standpoint .The two-year limit alone is reason enough to anticipate this, since it forecloses incentives for training and retaining workers in an industry that is experiencing serious problems with skill shortages and turnover. According to People 1st, turnover in the hospitality industry is estimated at 20 per cent, while the KPMG survey of BHA members puts the estimate even higher, at 50.2 per cent. This costs the industry approximately £274 million annually. The Financial Times, reported that the ‘barista visa’ would also be open to other sectors that are heavily reliant on low-wage migrant labour, such as social care, agriculture, and construction. While the numbers of migrants for each industry will be restricted with an overall cap, there is no guarantee that there would be enough EU migrants who meet the proposed criteria and aim to work in hospitality. Last year, The Times reported that only 40,000 people applied on the existing Tier 5 youth mobility scheme for all industries. This is 20,000 less than the number of EU migrants who gained employment in the hospitality industry alone. Given the strict criteria of the ‘barista visa’ and the fact that the hospitality industry is expanding rapidly the number of EU migrants is likely to fall woefully short of the needs of employers. Combine this with low wages and the rising anti-migrant rhetoric of mainstream political parties and the situation looks dire indeed.

To attempt to lessen the impact of Brexit, BHA members have petitioned the government to retain EU workers and openness for tourism. They recognise how important migrant labour is for their businesses even if they have not necessarily recognised the rights and economic rights of migrants as a whole. The BHA’s focus on the business case for hospitality ignores the concerns of most of its labour force. Historically, they have opposed legislation designed to protect workers’ interests such as the minimum wage legislation in 1999 and tips legislation in 2009. They have also avoided addressing criticisms from trade unionists about issues in the industry. Last year, Unite regional officer Dave Turnbull offered a different explanation of why the industry cannot recruit and retain the type of workers it needs. He cited a fundamentally “flawed, low cost and exploitative business model” in an industry where “low pay, insecure working, exploitation and institutionalised bullying are rife”[1]. The ‘barista visa’ will only exacerbate these problems. It would further entrench divisions in the labour market and further undermine the collective rights of workers. The scheme denies migrants a social safety net and offers no chance to progress in a career or build a life in the U.K. long-term.

The ‘barista visa’ also fails from a worker’s perspective. Labour Force data shows EU nationals are already concentrated in low-paid and lower-level occupations, especially in the hospitality industry. As of 2016, less than 1% of EU nationals in the hospitality industry were employed in the ‘higher managerial and professional’ occupation grouping. The current state of UK labour law weaves issues of migrant rights into the employment relationship, leaving open the potential for employers to terminate their contract which could effectively leave them exposed to deportation. The ‘barista visa’ ultimately will keep EU migrants in a legally subordinate position to nationals, exacerbating the ‘migrant division of labour’[2] and further undermining all working conditions. The further precarisation of migrant labourers in the hospitality industry will at best allow business owners to continue exploitative practices and at worst, further divide workers.

[1] Unite, 2016. Unite in direct plea to London mayor to tackle exploitative work practices in London’s hotel industry. Press Release.