September 19, 2021

Lockdown Norms and Staff Crunch: UK Hospitality Sector Faces Fresh Challenges

After struggling with three national lockdowns since the pandemic broke out, the UK has gradually opened the economy. Bars and restaurants began welcoming customers from 12 April onwards, and indoor dining is expected to open from 17 May. The Covid-19 pandemic ravaged businesses, especially the ones in the hospitality and aviation sectors. Global travel restrictions and social distancing norms crippled both sectors.

The hospitality sector is expecting that the pent-up demand and a UK-oriented holiday season would help the sector to revive with a profitable summer season.

But as the industry is gearing up for recovery of the businesses, staff crunch is the biggest challenge the sector is facing. Job losses in the sector during the lockdown forced workers to leave their jobs and look for jobs in other sectors. The crisis is so pressing that most establishments are struggling to hire enough workers, due to which, plans to fully operationalize by May might fall apart.

Restaurants and pubs have said that as many as a quarter of those who were employed before the Covid-19 pandemic may not return owing to the uncertainties. Besides post-Brexit, the challenge pertains mainly to the lack of availability of skilled labor from the EU, which is causing hiring issues, specifically in the kitchen.

UK workforce in the hospitality sector before the Brexit comprised mainly overseas workers, including those from the EU. But a major chunk of them have left England last year, and there is no clarity on whether they would be back any time soon.

The listed restaurant operator, Mitchells & Butlers (M&B) lost 9,000 of its 39,000 staff in the last year. The restaurant owner D&D is looking to hire as many as 400 new hands to add to its total workforce of 1,300. Pizza Express laid off thousands of its employees in the last year and is now looking to hire 1,000 staff.

A report by Fitch Ratings has said that restaurants, pubs, hotels, and restaurants would have to bear additional costs of both hiring and training new employees, which would impact margins in the short term. According to the report, prior to the Brexit, EU nationals comprised 12 percent of the UK’s hospitality workforce.

The report pointed out that the staff crunch was not even across the sector. Establishments like Whitbread that employ directly, would likely have more employees returning to work than those who hire part-time or through staff agencies. It said that the crunch would be felt more in London and other big cities, as they hired more foreign workers than remote joints, which depend on local communities would remain less affected.

Though venue owners expect huge demand after a year but if opening hours are limited due to staff shortage and therefore, it might impact revenues. A recruitment website highlighted that vacancies on its website were up by over 85 percent in the last couple of weeks. About 22,000 roles are now being advertised. Data from the Office for National Statistics suggest that the hospitality sector has 355,000 vacancies compared to a year ago. About 3.2 million were employed in the sector before the pandemic.

UK businesses were severely impacted by the pandemic. The easing of lockdown norms was supposed to help businesses get back on their feet. The hospitality sector is one of the biggest employment generators. If the staffing crisis is not resolved soon, it would not only defeat the purpose of easing norms, it would also impact revenues in a big way.

Written by Kunal Sawhney, CEO, Kalkine Group. For more information: https://kalkinemedia.com/uk