The UK’s hospitality sector has been grappling with significant labour shortages, a challenge exacerbated by recent changes to UK immigration policy. These shortages have led to increased pressure on existing staff, longer working hours and a decline in service quality. As a result,
businesses are struggling to recruit and retain staff, leading to higher turnover rates and increased operational costs. Addressing these challenges requires a multi-faceted approach, including improving working conditions, offering competitive wages and exploring new recruitment strategies both domestically and internationally.
Current landscape
The hospitality industry in the UK has traditionally relied on an international workforce. However, recent adjustments to the immigration system have further constrained the talent pool. Key changes include:
- Brexit: The UK’s departure from the European Union has had a profound impact on the hospitality sector. Prior to Brexit, EU nationals accounted for a significant portion of the UK’s hospitality workforce. Since 2019, the implementation of new immigration policies combined with the Coronavirus pandemic has resulted in approximately 120,000 EU workers leaving the hospitality sector.
This exodus has contributed to a significant skills gap, making it challenging for businesses to fill vacancies and maintain operations. Additionally, Brexit has increased the cost of EU food and beverage imports due to tariffs and additional administrative burdens.
- Increased minimum salary threshold: The minimum annual salary for sponsored Skilled Workers rose from £26,200 to £38,700 in April 2024. This substantial increase disqualified many potential candidates who would otherwise contribute significantly to the sector.
- Immigration salary list: Also in April 2024, the shortage occupation list (a list of occupations eligible for reduced salary thresholds under the Skilled Worker route) was replaced with the new immigration salary list, which does not currently contain roles in the hospitality sector.
Some worry that the Labour government’s clampdown on abuse of the UK’s immigration system coupled with their strong focus on reducing net migration are likely to intensify workforce shortages within a sector already facing a scarcity of workers. This shortage of labour would affect various roles, from front-of-house staff to skilled chefs and managers.
Labour shortages: key statistics
- Vacancies: The Office for National Statistics (ONS) estimates that there were approximately 121,000 vacancies in the hospitality sector between July and September 2024.
- Turnover: The hospitality industry has the highest employee turnover rate amongst all sectors, with an average turnover rate of 52%.
- Sector impact: Hospitality is the UK’s third largest employer, with 3.5 million people working in the sector. The hospitality sector contributes £93 billion to the UK’s economy each year. Despite these figures, it continues to struggle with a high internal skills deficit.
New entrants under the Skilled Worker route
UK hospitality businesses which hold a Skilled Worker
sponsor licence can benefit from the reduced salary provisions for ‘new entrant’ Skilled Workers. These allow them to pay new entrants a reduced gross annual salary; the higher of £30,960 per year or the ‘going rate’ for the sponsored worker’s occupation code.
Candidates eligible for new entrant Skilled Worker sponsorship include:
- those under the age of 26;
- individuals with student/tier 4 (general) immigration permission and have either completed/due to complete their course within the next three months;
- those with graduate leave to remain;
- individuals working towards a recognised professional qualification in a UK-regulated profession.
There is a time limit on the length of time new entrant Skilled Workers can be paid a reduced salary, depending on their circumstances.
These provisions help make it more feasible for younger workers and new entrants to join the UK workforce, providing a valuable resource for sectors such as hospitality, who are faced with chronic labour shortages.
Strategic responses
To mitigate these challenges, hospitality businesses can consider the following strategies:
- Enhanced recruitment efforts: Focus on attracting domestic talent through targeted recruitment campaigns and partnerships with educational institutions offering hospitality programmes.
- Retention initiatives: Implement robust employee retention programmes, including competitive salaries, career development opportunities and improved working conditions to retain existing staff.
- Utilising the global talent pool: Despite the higher salary thresholds for sponsored Skilled Workers, businesses should continue to leverage the global talent pool by offering competitive packages that meet the new requirements.
- Advocacy and collaboration: Engage with industry bodies and government agencies to advocate for more flexible immigration policies that reflect the sector’s needs. Collaboration with and stakeholder engagement with organisations such as UK Hospitality and the Migration Advisory Committee can amplify these efforts.
Illegal worker civil penalties
Employers in the hospitality sector must also be aware of the significant
penalties for employing illegal workers. In February 2024, the civil penalties for employing illegal workers increased substantially:
- First offence: The maximum fine rose from £15,000 to £45,000 per illegal worker.
- Repeat violations: The maximum fine increased from £20,000 to £60,000 per illegal worker.
These penalties underscore the importance of conducting lawful right-to-work checks and maintaining compliance with immigration laws. Employers should ensure they have robust procedures in place to verify the immigration status of their employees to avoid these severe penalties.
How Moore can help
Navigating the evolving
immigration landscape is crucial for addressing labour shortages in the hospitality sector. By understanding the implications of policy changes and adopting strategic responses, businesses can better position themselves to attract and retain the talent necessary for their operations.
For advice on how these changes may affect you, please
contact us.