The hospitality and leisure industry relies heavily on international labour According to industry groups and business owners, it is becoming increasingly hard to attract employees to Britain because of the collapse in the pound. The downfall in the sterling since the Brexit announcement last year is chipping away at potential earnings, and uncertainty over the eventual status of EU nationals has not helped the situation either.
The decrease in foreign staff is being blamed on Theresa May’s failure to offer assurances to EU workers living in the UK. A record number of nurses from the EU are already quitting the NHS and it is likely to get worse now that article 50 has been triggered, a plan to kickstart the two-year process for Britain to leave the EU.
Official figures reveal that the number of EU-born workers in the UK fell by 50,000 between October and December 2016 to 2.3 million, in a decline led by people working in construction, the public sector and banking.
While the number of EU nationals leaving is limited at present, according to the Bank of England, many businesses, are having trouble hiring from abroad. Some are even renting houses for employees or providing minibuses to transport staff to work, as ways of attracting desperately needed employees.
In the search for a solution, Thinktank the Resolution Foundation says that sectors that are heavily reliant on lower-paid migrant workers, such as agriculture, construction and food manufacturing, could invest more in machinery and robotics, an automated workforce, to fill the employment gap. But other industries will need to train more British employees to plug the gap, which could take more time.
“Employers need to start preparing now,” said Stephen Clarke, economic analyst at the Resolution Foundation.
Workforces in the leisure industry including hotels and restaurants, manufacturers and transport are made up, respectively, of 33%, 23% and 20% non-UK nationals, according to human resources consultancy Mercer, where partner Gary Simmons says Brexit is taking place on top of a four-year decline in numbers of British-born workers.
He says: “Since 2013, the UK-born workforce has been declining as people retire, and we can see how reliant certain industries are on overseas workers filling the gaps. The UK is likely to impose more stringent migration controls… Every company in every sector in the UK will be competing for a reduced pool of available workers.”
These are the UK sectors most affected by Brexit and its impact on the workforce.
Hotels and restaurants
Total workers: 1.9 million
UK-born 1.3 million
EU-born 265,000
Non-EU-born 369,000
Take Pret-a-Manger as a prime example, one in 50 applicants is British, and the sandwich chain has said it would suffer a staff shortage if it had to turn its back on EU nationals.
Denis O’Donnell, who owns the Peruga restaurant in Stockport in Cheshire, has already felt the pinch. He says: “There has been a massive surge in demand for kitchen staff, and almost zero response to ads.”
He recounts that at the last meeting of the British Hospitality Association, “people were doing a lot of handwringing and saying: we can’t get chefs”. He adds that people are going to “ridiculous lengths” to get staff, like renting houses and bussing them in.
O’Donnell employs 24 people, including 10 full-time staff. Of those, four are EU nationals: an Italian husband and wife team, one of whom is maître d’; plus a Latvian and a Hungarian kitchen porter. He says these two are “good, solid, reliable guys in their 60s. You won’t get English guys in their 60s doing this job.”
Farming
Total workers: 385,000
UK-born: 328,000
EU-born: 30,000
Non-EU-born: 27,000
Laurence Olins, chairman of trade body British Summer Fruits (BSF), said that where a job previously attracted 10 applicants, this year there were only three or four.
“There is less choice for employers. We may get the numbers but not the quality we had before,” he says. According to Olins, the main culprit is the 12% fall in sterling against the euro since the Brexit vote.
“They [EU workers] are suffering a big pay cut, even though pay has gone up with the increase in the living wage, because it converts to less in euros. We are in big competition with European countries like Germany and Holland, where there are no currency issues.”
The fruit-farming industry employs 29,000 seasonal workers, who go back to their home countries after six to nine months in the UK. Nearly all of them come from the EU, mainly Romania and Bulgaria, but also Poland and Hungary. Horticulture overall relies on 85,000 seasonal workers.
“We are very concerned about 2018 and 2019,” Olins added. “There is no scheme being put in place, but we have to live one year at a time.”
The National Farmers’ Union is keen for a special visa system for seasonal workers on farms. BSF warns that growers could otherwise sell up and move their operations to France or elsewhere in the EU.
Construction
Total workers: 2.4 million
UK-born: 2.1 million
EU-born: 192,000
Non-EU-born 201,000
The Royal Institution of Chartered Surveyors (Rics) revealed that the construction industry could lose over 175,000 employees – or 8% of the sector’s workforce – if the UK loses access to the European single market. This could put key projects, such as the HS2 rail link between London, the Midlands and northern England, at risk.
Bellway, a major housebuilder, warned last week that the construction industry could suffer and fail to overcome Britain’s housing shortage if EU workers were to leave the UK.
Chief Executive of Bellway, Ted Ayres, said: “The big thing for the construction industry is we have a reliance on overseas labour. Will it [article 50] have any impact on people not wanting to live in the UK or will it stop further people coming to the UK to help us meet the housing demand? We’re not going to be able to build the number of units completely off the UK workforce.”
Rob Tincknell, chief executive of the Battersea Power Station Development Company, recently told the Times that one housebuilder had 15,000 workers on site before Christmas and only 11,000 came back after the break.
Health and social care
Total workers: 4.4 million
UK-born: 3.7 million
EU-born: 217,000
Non-EU-born: 430,000
There are growing concerns that Brexit will lead to a staffing crisis in health and social care. A record number of nurses from the EU is leaving the NHS, and the number of EU nationals registering as nurses in England has depleted by 92% since the referendum. And pressures will only grow, because a third of doctors plan to retire by 2020.
Care homes are hugely reliant on foreign workers. Professor Martin Green, chief executive of trade body Care England, said small numbers of EU-born care workers were leaving, but the real issue was recruiting new staff. When a recruitment drive for nurses was conducted in Portugal a week after the June referendum, half the candidates withdrew their applications. More recruitment drives are planned but, he says, it’s made difficult by the weakness of the pound.
“At one stage it was €1.4 [to the pound] and it was really advantageous [for EU citizens] to be here, but those days are gone,” Green adds. “If I’m in Poland, I can get to Germany in a couple of hours. It used to be worth my while going to the UK because I was getting more money, but now it’s not.”
As funding is tight, many Britons don’t want to work in care homes due to a lower rate of pay. Green suggests that the care sector should be spared the apprenticeship levy – which charges businesses 0.5% of their annual pay bill – and should be granted relaxations in the work permit regime for non-UK workers.
Manufacturing
Total workers: 3.4 million
UK-born: 2.6 million
EU-born: 362,000
Non-EU born: 417,000
EEF, the manufacturers’ organisation, has also reported some EU workers going home for Christmas and not coming back after the break. The food and drink industry, the largest UK manufacturing sector, employs 115,000 EU nationals.
Ian Wright, director general at the Food and Drink Federation (FDF), says members reported in a survey at the end of last year that their EU employees felt “unwanted and uncomfortable”.
Wright adds: “Our members have also said they’re having difficulty recruiting EU nationals for certain roles. We face a skills gap, and require access to these employees to remain competitive. They are vital to keeping the UK fed. If you can’t feed a country, you haven’t got a country.”
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