The number of EU citizens coming to the UK last year fell by 12%, according to the ONS, with the EU Referendum named as a key driver for the drop.
The industry responded with alarm, as the hospitality sector continued to face a shortfall in employees, notwithstanding Brexit.
ONS figures from earlier this year showed net migration to the UK from the EU in the year to September 2017 fell below 100,000 for the first time in more than four years, at 90,000, down from an estimated 165,000 in the previous year, a fall of 45%
The Migration Statistics Quarterly Bulletin for this period noted that: “The number of people immigrating for a definite job has remained stable but there has been a 43% decrease in the number of people immigrating to look for work over the last year, especially for EU citizens. These changes suggest that Brexit is likely to be a factor in people’s decision to move to or from the UK – but decisions to migrate are complex and other factors are also going to be influencing the figures.”
Neil Park, head of the population estimates unit at the Office for National Statistics, said: “This is the lowest annual population growth since 2004 due to a fall in net migration, fewer births and more deaths than previously seen. The effect is most pronounced in London and other areas that have seen high levels of immigration in recent years.”
UKHospitality CEO Kate Nicholls said that the figures were “an alarming portent of possible disaster for the hospitality sector. Although net migration from the EU still stands at 100,000, this represents a significant fall on the previous year. Particularly distressful is news that this squeeze is being felt most acutely in lower-skilled labour which makes up the bulk of the workforce.
“The hospitality labour pool is shrinking and around a quarter of employers in the sector already say they are struggling to fill vacancies. The hospitality sector relies heavily on EU migrants to fill many of its vacancies and should this trend continue businesses are likely to struggle to keep up with projected growth.”
According to KPMG’s Labour Migration in the Hospitality Sector study, the UK hospitality sector was highly reliant on EU nationals, with between 12.3% and 23.7% of the sector’s workforce made up of EU migrants. KPMG estimated that the hospitality sector currently requires 62,000 EU migrants per annum to be able to maintain current activities and to grow.
KPMG said: “Even with the current open access to the EU labour market, the hospitality sector faces a challenge in recruiting enough workers to meet its needs. The sector has a higher proportion of hard-to-fill vacancies, and greater growth in the number of monthly job postings, than any other sector.”
The report concluded that, in a scenario in which there was no new migration into the UK hospitality sector from 2019; existing EU nationals were not required to leave; and the recruitment of UK and rest of world workers remains constant, we estimate that the hospitality sector faces a recruitment shortfall of upwards of 60,000 per annum workers from 2019.
Based on this scenario, by 2029, the hospitality sector could face a total recruitment gap of over 1 million workers (over a quarter of its expected total ~3.5m employment) due to lack of access to EU workers unless it is able to replace EU workers with other types of employees – from other sectors, the unemployed and those not currently in the workforce.
The consultant said it would be hard to fill the potential recruitment gap with the current unemployed and inactive population – existing vacancies in the hospitality sector were already proving hard to fill despite existing initiatives in place to attract these workers.
There might, it said, be some scope to reduce the sector’s labour force requirements through productivity improvements and automation, however extensive productivity gains were unlikely to be possible “due to the manual nature of many of the roles and the demand from customers for the human interaction that typifies the sector”.
HA Perspective [by Katherine Doggrell]: It turns out that creating a hostile environment for immigrants leads to less immigration and heavens who would have thought it? The fall in the value of sterling hasn’t helped and, for those who want to work in hospitality for more than just a summer, lack of long-term stability means that there’s very little appeal to a jaunt in the UK.
Looking to our political leaders is no place to seek reassurance and we would go into specifics but, while this is not a family publication this is the summer holidays and who knows what eyes are glancing this way.
So the sector will have to work out its own plan and ’twas ever thus. Various ideas have been floated and, although KPMG was critical of being able to make extensive productivity gains through automation, there are options. Hotels might also look to offering staff cheap accommodation, something which would appeal in locations such as central London.
The solution, sadly, is likely to be a somewhat longer play, but one which is long overdue – turning hospitality into a true career. This involves working on career progression and staff retention. It also means looking outside the sector for recruits. Marketing, HR, many of the technology disciplines need not come from a hotel background and a fresh pair of eyes can be a blessing. Recruiting from Nike didn’t hurt Starwood Hotels & Resorts after all.
The hospitality sector has always set itself apart from other industries, seeing itself as, well, not an industry. It looked down on technology and that didn’t work out too well when OTAs appeared on the scene. It won’t work now. If the pool narrows, it must be vicious in its attempts to claim more than its previous share of the pool.
Additional comment [by Andrew Sangster]: There is a real sense of Brexit fatigue setting in. With the constant talk of CETA plus or EEA minus among commentators but very little real information coming from the UK government, this is not surprising.
The answer (at the risk of raising the spectre of another era of political failure) is to get back to basics. Focus, where possible, only on the bits of real information that are available and their impact.
The main economic change so far has been the decline in the value of Sterling relative to other major currencies. Working in the UK is less attractive if you intend to send money back to another country which now has a stronger relative currency.
For EU workers, clearly, the UK now looks a less promising destination in which to obtain employment. This is not the Brexit vote per se but the currency. The vote may or may not be impacting on sentiment – I suspect not much – but it needs to be left to the commentators to wrangle with the truth of this. Hotel operators must just get on with running hotels.
There is no easy answer here but it is worth making the observation that it is at times of change that differentiation really matters: the good operators have the chance to pull ahead of the bad ones. The tide may be going out for all but the best will be afloat for the longest.
Offering a better place to work, paying slightly more money and improving productivity will mean you are going to succeed where others struggle. When being chased by a lion you never have to outrun the lion, just be faster than the slowest member of the group: the more lions, the more you have to move up the ranking of runners. Brexit is seeing a fairly big pride on the loose.
The next six months or more are going to generate a lot of political noise. It is certainly the case that the hospitality industry needs to make its voice heard but it needs to avoid sounding shrill and hysterical.
I’m not at all sure that pleading to be given concessions in the politically charged area of immigration is going to win many friends in government. It might be better to focus on areas the government can deliver: cutting back on bureaucracy to encourage more visitors would be a fine start.
On a trip in July to Australia, it took me just a couple of minutes to complete and obtain an Australian visa. An online form, supported by valid documentation (my passport), was enough. Why does the British government make it so much harder for foreigners to come to the UK? Simplifying this bureaucracy will actually save money rather than cost any.
More expensive, but not onerous, is ensuring that the UK’s Border Force is up to task and can process visitors quickly. And this is something that can be sold politically as making us all safer.
Visitors to Britain are at record levels. In 2017, UK inbound visits were up 4% to 39.2 million and spend was up 9% to GBP24.5m according to the International Passenger Survey data overseen by the Office for National Statistics.
The most valuable source market is the US, accounting for 15% of all spend. This is nearly three times bigger than the next most important market in value terms, Germany, which accounts for 6% of spend, just ahead of France. For all the hype, China is still only at 3% of total spend but makes the top 10 at tenth.
Concerted campaigns that reinforce the message of tourism’s export potential while quietly lobbying for regulatory change and modest infrastructure investment to make us more competitive are going to win friends and influence people in government. Now is not the time to be picking up banners.