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Critical staff shortages as millions languish on furlough

03/06/2021 – Critical staff shortages as millions languish on furlough

Michel Roux Junior has cancelled his lunch service because of staff shortages (Daily Telegraph: Michel Roux Jr of Le Gavroche in Mayfair calls the difficulty in finding enough staff ‘incredibly frustrating and painful’) and our own hospitality clients are reporting similar frustrations.

Our tales of staff shortage are not just London-centric – last week I spoke to the owner of group of food-led inns in the West Country who reports staff leaving to join rivals offering higher wages. In the absence of innovative solutions (which tend to take time to propagate) he saw no alternative other than to join the wage war to entice his own staff to stay with the group.

4m currently furloughed during UK recovery

It’s clear that Brexit and the extended lockdown have both played a significant part in driving away labour from the sector, and wage inflation is inevitable. But while hospitality (and other sectors) are desperate for labour, the UK tax payer is still funding (until October) just shy of 4 million furloughed workers (.gov official stats to end March), many of whom are likely to be redundant, but who just don’t know it yet.

Britain is bouncing back but important sectors are short of labour to fuel that recovery, and some of the answer is sitting in the furloughed community, who have very little incentive to ‘go where the work is’. There is of course an argument (as called for by Wetherspoon’s Tim Martin and others) to issue a special visa for European hospitality workers, but part of the answer as least lays within our own borders. While the UK has bounced back more quickly than expected, government policy to maintain furlough until October remains resolutely firm. That policy was formed based on what we knew at the beginning of the year, and there seems to be a strong argument for reconsidering the scheme based on what we know now.

Furloughed workers have little incentive to seek out new opportunities, and desperate employers are seeing missed opportunities to trade through lack of staff. The hospitality industry is calling for the removal of restrictions on 21st June and an end to social distancing, but given that much of the industry is struggling to find staff to resource existing demand, one has to wonder how they will cope at full capacity.

How many furloughed workers are likely to be made redundant at the end of September?  We’ll have a better idea from August when employers will start consulting on proposed redundancies,* and while we don’t want to see mass redundancies at any time, it will be surely better to encourage employers to start consulting earlier with a view to releasing staff they know will no longer be required, so that those staff can take advantage of the jobs currently on offer. It’s entirely possible that by October, when the bulk of redundant workers enter the labour market, many of the jobs currently available will be filled by other means, possibly by non-UK workers.

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