Menu of post-Brexit visas unpalatable to hospitality employers

The hospitality sector is one of the highest employers of EU migrants with the most recent Employer Skills survey finding a third of hotels and restaurants employ at least one person from the EU and they represent 19% of the workforce. So it is no surprise to find that hotels, restaurants, coffee shops and bars are among the businesses most affected by any reduction of migration ushered in by Brexit.

NIESR has been tracking the sector’s response to Brexit since before the referendum. At an industry round table  we held 2 years ago worries centred on the potential loss of their EU workers, future provision for low skilled migration and the costs and bureaucracy of a new, visa based, system. This week representatives from big corporate names joined SMEs and policy makers at another NIESR round table co-hosted with UK Hospitality. We found them more worried than ever, particularly about the unappealing menu of visa options in the Immigration White Paper.

Loss of EU workers and the process of applying for settled status

Two years ago our roundtable participants urgently wanted clarity on the status of their existing workforce. That issue has been addressed through the settled status scheme, though concerns about applying through a non-android phone, awareness and compliance remain. But in the meantime net migration from the EU has fallen to a level last seen in 2009 and by 60% since the referendum alone. This hasn’t gone unnoticed on the ground, with employers reporting loss of EU workers and fewer applicants. One expanding restaurant chain is now spending twelve times as much on recruitment than before the referendum. And a hotel was only just coping by incentivising staff to recommend family and friends.

Employers felt that the fall in the value of sterling was pivotal to the exodus of EU workers, particularly higher paid employees in management and professional jobs. Employers also said that EU colleagues felt they were unwelcome in the UK and had reconsidered their future here. As one restauranteur commented: ‘It’s a fairly caustic environment for them and a lot don’t feel welcome’. The general climate of uncertainty about future immigration arrangements was also seen to influence decisions, especially of potential migrants who employers were trying to recruit with little success.

Fishing from a larger pool

Employers told us repeatedly that they don’t deliberately set out to recruit migrants but face significant problems recruiting local workers. Asked whether they couldn’t just pay more, they explained that they would merely be competing with other employers in the sector, that price increases would have to passed on to the customer and living costs would increase.

A variety of initiatives within the sector testifies to its efforts to fish from a larger pool of talent. They include the Springboard Charity which supports disadvantaged people into employment in hospitality, leisure and tourism. Since the referendum employers have also looked to groups including ex-offenders, ex-service people, the homeless and the long-term unemployed. But as one employer explained, ‘it’s a lot of work and it’s not filling the gap’.

And employers emphasised that it’s about shortages of labour, not skills. As one participant explained: ‘We’ll upskill anybody. We’ll make that investment’. But recruits have to be work-ready – reliable and hard-working, with good social skills. EU migrants have offered the sector a steady supply of these ‘soft’ skills. New arrivals in particular are also more prepared than British recruits to start at the bottom while learning the language. This fits well with the value the sector places on understanding the business and on the job training.

A limited bill of fare

Hospitality employers have always made the case for immigration policies to cover lower skilled migration and the White Paper proposals were seen to fall short of the sector’s needs. But worse than that, there’s a view that the proposals are targeted at the sector as one of the largest and most visible employers of EU migrants. As one participant put it: ‘The message is that, if the immigration system that’s put in place affects the sector, it’s a price worth paying (to show that the UK Government is serious about reducing net migration)’.

Skilled visas will be subject to qualification and salary thresholds. Provisionally set at £30,000 employers said this would have to fall much nearer to £20,000 to cover most posts in the sector, especially since tips were not taken into account. As Marley Morris from the IPPR pointed out, around 90% of jobs currently carried out by EU national in the sector would not be eligible for a skilled visa. The only provision made in the White Paper for lower level skills is a ‘transitional’ arrangement for 12 month, non-renewable, visas and employers were adamant that these would not meet the sector’s needs: costs incurred through in-house training would not be re-cooped, employers wouldn’t be unable to progress individuals to supervisory and management posts and the costs of continual recruitment would soar. Employers also feared the visas would create a two-tier workforce and make integrated teams more difficult to achieve, as a hotel manager stated:

‘You wouldn’t invest in someone here for a short period of time in the way you’d invest in your other employees. There’s friction there’

The White Paper includes provision for an extended Youth Mobility Scheme open currently to 18-30 year olds in eight countries including Canada, Australia and Japan. But again, they didn’t see this as meeting their longer-term needs, unless visa holders could transfer to other routes without having to leave the country and reapply.

Wake up and smell the coffee

Migrants have enabled the sector to expand so that our cafes, restaurants and hotels are now seen as an asset for tourism, which has not always been the case in the past. But the industry now faces what a number of participants described as a ‘perfect storm’. Demographic changes have reduced the supply of young people who in any case would prefer to work in sectors such as arts, media, teaching and health. At 4.1% unemployment is at an almost record low while at 75.5% economic participation is at a record high. This makes migrants pretty essential if businesses are to thrive once Britain leaves the EU.

What sometimes gets lost in the Brexit noise is that the hospitality sector, which has traditionally employed many migrants, also employs more than 2.5 million British workers whose jobs are at stake if a ‘skills based’ immigration system means employers can’t recruit the workers they need.