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Viewpoint: Is recruiting from the EU the easy option?

27 October 2016

Martin-Christian Kent, executive director at People 1st, how can we tempt them?

In recent weeks the government has started to debate what impact migration restrictions will have on businesses as a result of Brexit. The hospitality and tourism sector wasn't mentioned explicitly, but with nearly a quarter of its workforce made up of migrant workers, is it taking the easy option by not recruiting the local labour force?

Currently, 38% of hospitality and tourism businesses are reporting that they have hard-to-fill vacancies that are becoming increasingly challenging as the labour market tightens. Unemployment is at 4.9% and has continued to fall since a peak in 2008. At the same time, the percentage of migrant workers has gradually increased as businesses have found it harder to recruit. As a result, regions with lower unemployment have a higher percentage of migrant workers working in hospitality.

Despite the contracting labour market, the hospitality and tourism sector has continued to invest in its staff. Some 1.5 million employees received training last year which, based on an average investment, equates to roughly £1.2b per annum. In 2015, the hospitality and tourism sector supported over 18,000 apprentices and the latest government statistics suggest that nearly 87% of those are British nationals.

This suggests that hospitality and tourism businesses are actively targeting the indigenous population, but that the size of their employment needs and a contracting labour market are making it increasingly difficult to fill vacancies. As a result, migrant workers have become an increasingly important labour pool for hospitality.

Restrictions are clearly going to be challenging and, as yet, we don't know what form they will take. A points-based system taking into account skills (dismissed by Downing Street, but still mooted by Amber Rudd at the Conservative Party conference) would cripple the sector, as the vast majority of the staff required in hospitality are at lower skill levels.

However, a work permits scheme for non-EU nationals will have less of a negative impact. The challenge facing businesses will be proving that there is 'market failure'.

Economists are likely to argue that the hospitality and tourism sector fails to attract sufficient talent owing to low pay, short-term contracts and largely unfavourable working conditions. However, things are beginning to change. Our research has shown that with rising staff costs and a tighter labour market, hospitality and tourism businesses are increasingly focusing on retaining and progressing staff. As a result, we are not only seeing salaries rise, but also greater staff engagement, flexibility and progression opportunities, which in turn lead to increased pay. It is going to be a long journey, but one that many employers have started.

From the sector's perspective, employers would be right to suggest that the government has a critical role to play in creating the right environment to make it easier for businesses to attract local talent. For too long, out of date careers support and competition with schools to hang on to students has meant too few people seeing the career opportunities available and too few starting apprenticeships or full-time programmes that would equip them with the skills to enter the sector.

In putting in place restrictions, the government would be better advised to work with businesses to ensure that the new system is fair and does not hinder continued growth. Equally, the sooner businesses understand what the government is proposing, the better they can start to plan.

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Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

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