With EU workers leaving jobs Britons don’t want to take, employers are scrabbling for solutions.
It used to be pretty easy for Alex Wrethman to find chefs. The restaurateur would stick an ad online and wait for the CVs to flood in. These days, he must work a lot harder — and even fight rivals for good staff. “It’s such a tough market, we need to get competitive,” he said. “You don’t necessarily want to walk into a restaurant round the corner and start dropping business cards, but if that’s what it takes . . .”
Wrethman estimates 10% of the positions at his three upmarket bistros are vacant, and describes marathon three-day sessions trawling LinkedIn for candidates. He draws parallels with the football transfer market, describing one of his managers as “a bit of a Mourinho” for his aggressive “tapping up” of chefs from other restaurants.
Wrethman’s west London business, Charlotte’s Group, is far from alone in its struggle to find staff.
Britain is hiring. There are a record 810,000 vacancies in the jobs market, according to the latest figures from the Office for National Statistics (ONS). With the unemployment rate at a four-decade low of 4.3%, a slowdown in the number of EU migrants coming to work in Britain is giving many businesses the jitters. Industries from housebuilding to fruit-picking complain of recruitment problems.
One element is missing from this job-seeker’s nirvana, however: the prospect of a pay rise. Traditionally, such “tightness” in the labour market has encouraged wages to shoot up, but average weekly pay grew by 2.4% last year, an improvement on recent performance but still well below the current 3% inflation rate.
Some forecasters — including at the Bank of England — say an acceleration is around the corner. Companies expect pay to rise by an average of 3.1% this year, the fastest growth for a decade, according to the latest survey by the Bank’s regional agents. Yet sceptics say we have been here before: over the past few years Threadneedle Street has consistently forecast a wage explosion that has not materialised. The glacial pace continues to confound economists’ models.
“To a remarkable degree, wages haven’t taken off,” said Paul Johnson, director of the Institute for Fiscal Studies. “There’s a big macro question: why is the British labour market working as it is?”
Wrethman’s experience offers some clues. The hospitality industry has arguably been hit hardest by shortages of workers. According to the ONS, 4.5% of all jobs in food and accommodation services are vacant, the highest rate of any sector. The problems are particularly acute in London and southeast England, where the reliance on chefs and waiters from the Continent has been greatest.
Doubt about their status after Brexit means “the Europeans who are already here are feeling uneasy about the future”, said Wrethman, 37.
That uncertainty, coupled with the weaker pound, has made it all but impossible to attract new staff from the Continent. At the same time, bosses bemoan the reluctance of British workers to pursue careers in the hospitality industry. Surely both the “skills gap” — a mismatch between native workers’ qualifications and the needs of industry — and the unwillingness of Britons to apply for certain jobs could be fixed by a pay rise?
“The idea of a skills shortage is a difficult one for economists,” said Len Shackleton, professor of economics at Buckingham University and a research fellow at the Institute of Economic Affairs, a free-market think tank. “You wonder about stories saying we need more people to pick strawberries or build homes. Why don’t the wages just rise?”
London restaurateurs say pay for chefs and less skilled roles such as kitchen porters has recently risen faster than inflation. There is little evidence of this at a national level, though: ONS figures show rates of wages growth lower than inflation in food and accommodation services over the past 12 months.
Across-the-board pay increases would mean bigger bills for customers, a tough sell in such a competitive industry.
A Brexit-induced skills shortage is more likely to put restaurant chains out of business than lead to higher pay, argued Ewan Venters, boss of Fortnum & Mason, the upmarket London department store that has had a staffing crisis in its restaurants.
“There’s an assumption that if business didn’t go and hire cheap labour from the EU, Brits would earn more,” Venters said. “But it’s not a question of going to Europe to find cheap labour; it’s a question of getting the volume of people who want to work in the sector.”
There is evidence across many sectors that better wages have failed to address longstanding recruitment difficulties, according to Heather Rolfe, a social policy analyst at the National Institute of Economic and Social Research.
Rolfe said low-skilled sectors such as food processing were already feeling the strain because of rises in the national minimum wage. “[Food processing] has to be located where the crops are grown, which is often in areas without many people. Migrants have generally been more willing to move around. There’s little sign that British workers will, even for slightly better rates of pay.”
Last week, Herefordshire-based Haygrove, one of the country’s biggest berry and cherry growers, said it would move part of its business to China because it cannot find enough fruit pickers here.
There are similar issues in some skilled sectors. John Tutte, chief executive of the construction company Redrow, said a shortage of bricklayers could put the government’s housebuilding targets out of reach, despite annual pay increases of more than 10% in the past few years.
“There’s been a skills shortage for years,” said Tutte. “It’s always been difficult to grow a skilled workforce in such a cyclical industry.”
The average salary for a bricklayer is £36,679, according to the website totaljobs.com, but they reportedly make more than £60,000 in locations where demand is high.
Tutte said Redrow has as much trouble recruiting in northern England, where the construction industry employs comparatively few EU workers, as it does in London and the southeast.
Like bosses in the restaurant business, he blames an image problem for the shortage of British recruits. “Workers in housebuilding are not badly paid — there’s no one on the bread line. But how much attraction to be a bricklayer is there among young people? Do they want to be on a site on a wet February morning?”
Redrow recently established Britain’s first housebuilding degree at Liverpool John Moores University, a move Tutte hopes will lend some academic prestige to the sector.
The government has pinned its hopes of plugging the skills gap on apprenticeships. Unfortunately, its flagship apprenticeship levy is turning into a disaster, with numbers of those starting an apprenticeship down 27% this academic year. Many companies complain the funds raised by the levy do not cover training costs, while small firms say they are struggling to navigate the system.
“We train people anyway, but the training we do doesn’t necessarily fit into the format demanded by the apprenticeship levy,” said Tom Molnar, founder of the London bakery chain Gail’s. “We have to put a lot of effort into figuring out how it works. It’s a policy with serious flaws.”
If apprentices won’t save the day, how about robots? A raft of politicians, including the chancellor, have suggested a lack of cheap labour could spur automation — helping improve Britain’s woeful productivity record in the process.
There are two problems, however. First, the most acute staff shortages are in industries least amenable to automation, such as hospitality. Second, much of the low-hanging fruit has already been harvested — witness the self-service checkouts in supermarkets. It is hard to imagine Britain’s notoriously investment-shy industries dropping many millions of pounds on expensive new kit when the future of the economy is so uncertain.
Hungry for staff, some bosses are trying more old-fashioned recruitment techniques. “A few months ago, for the first time ever, we began putting signs in shop windows saying ‘Join us’,” said Molnar.