If only we had a crystal ball again!

News & blog » Will Brexit impact your employee resource?

September 6, 2017

Inma Fuentes

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There is no doubt, the Brexit referendum result has created a period of uncertainty as the country waits to find out what the decision to leave the European Union will exactly mean to us as individuals and businesses.

Will we remain part of the bigger EU picture or be a separate piece in the European landscape?

According to a report last year by the British Hospitality Association, the hospitality industry is our fourth largest industry representing 10% of GDP, equivalent to £143 billion and employs 4.49 million people across the country. Over the past five years the industry has delivered 331,000 new jobs, equivalent to one in five new jobs created in this country.

A factor that will impact our industry is the ability of the UK hospitality and tourism industry to host business travellers, holidaymakers, events and conventions. Whilst this will be essential, in this article we focus on the potential issue around recruitment and our employed resources.

The BHA report also estimated that 700,000 of the 4.5 million people that make up our industry are workers from the European Union. This is an average of 15%, but London has the highest proportion of EU workers in the industry at around 35-40% of the workforce and in some businesses the proportion is more than 65%.

This flexible labour market has proven to be hugely beneficial to employers in the hospitality industry, with employers simply undertaking a “Legal Right to Work” assessment for EU nationals. However, has the sector become dependent on immigrant labour and now in danger of no longer being the attractive destination for foreign job seekers that it has been in recent years.

One of the biggest impacts of Britain leaving the European Union will be the change of free movement of workers. Currently companies based in the UK have the ability to take on employees from the EEA without needing immigration permission. This has resulted in over 2 million EU immigrants currently working in the UK.

It is understood that a high percentage of current EU workers employed in the UK hospitality and tourism sector would be ineligible for a work permit issued under the existing rules for non EU nationals. There are considerations for issuing work visas for workers from the European Union, but nothing is guaranteed at this stage.

Although government is negotiating, the likely change is sure to make it more difficult or less attractive for EU workers to work in the UK and vice versa. This will certainly impact the recruitment in the Hospitality industry and if the negotiations do not proceed to the ideal plan, then retention may be out of our hands.

Cabinet Minister and Brexit Secretary, David Davis has also made an interesting statement “it will take ‘years and years’ for Britons to fill jobs done by EU workers”. So will there be a skills shortage for the hospitality industry? In your area, are you seeing school / education leavers wanting to join our fantastic industry? If not, are you contributing to the employability skills and desire of our young people?

The industry is already seeing pressure on the level of recruitment and wage costs, with low unemployment rates and the increasing minimum / living wage rates. It is likely that any new immigration policy will see further impact for the hospitality industry.

Have you considered the impact on your business, if it was more difficult to recruit the skills and resources you require at the current wages rates?

If only we had a crystal ball again and knew what was going to happen!

Don’t panic amongst all the news, but we do recommend a review of your financial forecast to consider the ‘What If’ scenarios.

For Example;

What if you had new recruitment costs to recruit x% of new staff or perhaps pay 10% extra in wages to attract new team members?

What impact could potential changes make on your business? Will additional costs mean higher prices to your customers or the need to reduce other costs / investments or find more customers to maintain the profitability?

 

 

Contact details

  1. E: info@arrochar-associates.co.uk
  2. Tel: 07968 534034