Brexit will undoubtedly dominate the debates of the next parliament for at least the next two years but only one issue relating to Britain’s departure from the EU will seriously affect the UK hospitality industry: the availability (or not) of migrant labour.
Will the industry be able to recruit the (very) many migrant workers that it currently employs?
The answer is almost certainly not.
The present government is clearly thinking about introducing annual work permits for migrant workers, though details are scarce or non-existent. Even if this is the way forward, the number allocated to hospitality might not be nearly sufficient for its needs. The British Hospitality Association claims 100,000 work permits a year will be required post-Brexit. Given that there must be three or four times as many migrant workers already working in hospitality (possibly more – no one seems to know), the BHA’s figure seems realistic from the industry’s point of view. But, it’s likely to be pie in the sky.
Even if work permits are the way forward, we have no idea of the numbers of workers that might be accepted, nor their skill levels. There is little evidence to suggest that the government would agree to the large number that hospitality is claiming when they are competing against maybe even bigger claims from the care industry and NHS, retail and agriculture in particular – and when there is talk is bringing the number down to ‘tens of thousands’.
As hospitality is so dependent on migrant workers, the result of any reduction in their availability will put wage rates under greater pressure than they already are. The National Living Wages rises to £9 an hour in 2020 and there are additional pension and other HR costs to cope with.. Having a smaller pool of workers to recruit from, hospitality is all too likely to become a high wage industry by the end of the decade. It’s time for employers to prepare for this now.
Two other costs need to be addressed by the new government but these are nothing to do with Brexit.
Hospitality, in many ways, is being unfairly treated when it comes to rates. Hotels and restaurants which have been in city centre locations for years – and, in many cases, are only marginally profitable – are being hard hit by increases in local rates. At the same time, out-of-town businesses, newly set up, escape such punishing increases. This is inherently unfair. Will the next government do anything about this? Don’t hold your breath.
And the apprentice levy, which hits big businesses who, by and large, are already training their staff to the maximum, does little or nothing to encourage smaller businesses to train their staff, even though many of the latter will poach workers trained by the bigger employers. To be fair, the levy needs to be applied to businesses with a payroll of more than £1m (or even lower), not the present £3m limit. An amendment here could well be on the cards for the next government. We shall have to wait and see.