There is a simple answer to finding workers
My fellow business leaders need to recognise that Britain’s low-wage, low-status model is broken
What a difference a year makes. Twelve months ago, we were worried about soaring unemployment. Now, all the talk is of a recruitment crisis, triggered by more than one million job vacancies, with the hospitality and retail sectors particularly badly hit.
What can be done? Well, a starting point would be to stop talking about “job vacancies” and to start talking about “careers”. There is a difference. Jobs can be picked up and set down again, the jobholder suspecting that the employer is no more committed to them than they are to the employer. A career has a structure, a clear route for individual progress and status.
We also need to pay people more.
Careers provide people with the means to raise families and buy property. A career is a platform on which to stand and face the world. Too many low-paid jobs offer none of these things.
If sectors are suffering recruitment difficulties, it is simply because they do not offer adequate salaries. Many who once might have snapped up the jobs on offer are choosing not to work because the difference between being on benefits and earning a wage is not worth it.
Many at the top of these industries take comfort in alternative explanations. They say that British people do not want to take service jobs because they are seen as menial, or that the sector became over-reliant on labour from abroad. Then, of course, there is the claim that furlough and other state support schemes have eroded people’s work ethic.
I don’t believe any of this for a moment. Incentives matter, and the way they currently add up in hospitality and retail could have been designed to deter rather than encourage recruitment. Entry-level salaries are simply not adequate to justify the effort of going to work, particularly once you consider overheads such as travel costs.
For a very different model, we should look to the Continent. Go into a Mcdonald’s in Switzerland, and you’ll find that the majority of the people who work there are Swiss. There’s no need to bring in foreign workers and there’s no issue with finding employees. One of the reasons is that the minimum annual wage in Switzerland is around SF50,000, the equivalent of £40,000. With that kind of salary you can have an acceptable standard of living, pay your rent and justify going to work.
In countries such as Italy or France, we find experienced waiters who have worked in restaurants all their lives. As the pay matches the cost of living, they can do these types of jobs and still afford to have a decent standard of living. A proper career – that word again – is in prospect, quite the opposite of the UK’S low-pay, lowstatus model.
A recent report by the property specialists Savills found that, in the hospitality sector, employers reported wages across their businesses up by an average of 12 per cent compared with 2019. Traditionally, that would have been seen as a bad thing, making accommodation and food-service companies less competitive. But we should be less obsessed with profit and more interested in making sure that the salaries we are paying are consistent with a certain quality of life. We all know that a young person on £20,000 cannot survive paying rent in London – it’s impossible, and we should not ignore the issue.
Even the obvious objection that better pay must come at the expense of either higher prices for the customers or lower profits for owners no longer necessarily holds true. Technology offers us the chance to square this circle, with the opportunity to drive huge efficiencies. Under the traditional low-pay British model, these efficiencies would have been enjoyed by owners and shareholders. That will no longer hold. The recruitment crisis has pushed some employers to offer sign-up bonuses, which may solve the problem in the short term. But for a sustainable solution the only answer is higher pay.
The fallout from Covid-19 offers an opportunity to overhaul a now-broken model for recruitment and retention in these sectors – one that, currently, is failing either to recruit or retain.