D-Day is here. Today (Wednesday 29 March, 2017), the UK will officially announce plans to leave the European Union (EU). Article 50 of the Lisbon Treaty will be triggered and this will pave the way for two years of negotiations over the UK exit.
A major element of the talks will be to agree the way forward for EU workers living in the UK. The rights of these workers will remain unchanged until the exit is confirmed, which is widely expected to be March 2019. However, uncertainty over the issue leaves both employers and employees in limbo.
Pub trade associations and industry leaders are already warning of the negative impact that the loss of these EU workers will have on the sector. Even Brexit secretary David Davis has already admitted that it would take “years and years” for British citizens to make up the gaps left by EU workers.
And to top it all, this uncertainty comes at a critical time for the industry, which is facing a new raft of pressures. These include: the imposition of new national living and minimum wage
levels, an apprenticeship levy, rising food costs and a tax on sugar-sweetened soft drinks.
Lust for migrant staff
The only minor good news of late has been that huge planned hikes in business rates were marginally offset by relief measures announced in the Budget. Plans for an increase in national insurance levels for the self employed, which would have affected many licensees, were abandoned after an outcry by MPs and members of the public. And an earlier suggestion that operators who employ EU workers should pay a levy for the privilege was dropped.
Findings from a British Beer & Pub Association (BBPA) survey, unveiled last month, found that 27% of its members’ workforce are from overseas, with this increasing to 40% in more metropolitan areas, with kitchen staff an area of major concern.
And the demand for these workers is rising. For example, People 1st, the Sector Skills Council for hospitality and tourism, says that between 2011 and 2015, the number of non-British nationals working as chefs grew by 28,045, with the majority coming from EU countries.
Between 2014 and 2024 the hospitality and tourism sector will need to fill 1.3m new jobs. Currently, a quarter of hospitality and tourism business have vacancies, of which 38% are considered hard to fill, People 1st says.
Call for fast action
The pub trade relies on these workers, and the fact that there is still uncertainty over this issue as the country enters the Brexit negotiations is yet another blow at a time when the industry is already facing rising costs and a recruitment crisis.
News of the date of the Article 50 trigger brought swift responses from the main trade associations, which called for the Government to act swiftly to resolve the need for EU workers.
BBPA chief executive Brigid Simmonds told The Morning Advertiser that resolving the rights of workers was a vital issue and stressed that her organisation has been urging the Government to look at the contribution of UK food and drink sector to the British economy.
“But I don’t underestimate the challenges ahead,” she warns.
“On the positive side, the Government is indicating that it understands the needs of the hospitality sector and, specifically, the requirement for soft skills, and we will be looking to see this come through in concrete proposals as we prepare to leave the EU. We are strongly making the case that there should be no changes to the rights of our existing employees, and for the development of agreements such as the Youth Mobility Scheme, which currently allows young people from some Commonwealth countries to work here without a visa.”
Association of Licensed Multiple Retailers chief executive Kate Nicholls has already suggested there needs to be a transitional system and has proposed a guest worker permit as a solution. “Employers will need to know that their non-UK EU employees have the right to remain and work in the country; otherwise, businesses will be unable to commit to the long and medium-term investment and training that is needed to grow a business,” she says.
“Even before the referendum, many operators struggled to fill vacancies – either with British or non-British candidates – so many of these vacancies will still need to be filled by migrant workers. Otherwise, a sector that has generated one in eight of all new jobs since the financial crisis, will find itself facing a serious personnel shortage.”
Taking the initiative
While the pub sector fears the uncertainty, London-based Fuller’s has already taken the initiative. More than 40% of the Fuller’s Inns team members are non-UK citizens, rising to in excess of 60% in London, with the majority from the EU.
A Fuller’s spokesman says: “We are currently paying the permanent residency fee for those team members who have been in the UK and with us for more than five years, but this is continuously under review to help our team members in any way we can. So far, we have contacted 200 people with regards to this offer.”
Chris Hill, CEO at the New World Trading Company – which won an unprecedented six categories at the Publican Awards – was one of the 20 signatories to a letter in December calling on the Prime Minister to help the industry.
One of the issues it highlighted was the “anxiety” felt within the sector over potentially losing many of its foreign workers.
Hill says that when the letter was written they were looking at a number of issues not just Brexit.
“We were talking about the perfect storm of costs coming to our sector,” he says. “We are looking for as much certainty as possible as soon as possible. There is a risk to trade, because ultimately it (the uncertainty) drives down consumer confidence.”
He maintains, however, that while concern about the availability of a workforce is an ongoing worry, this will not be a direct problem for a number of years.
But it is not just trade associations and pub companies that are concerned. Individual licensees are worried about the changes, and members of the British Institute of Innkeeping (BII) have been in discussions with the organisation.
BII CEO Mike Clist says it is a matter of “deep concern” for members. “The BII believes the Government must secure the rights of all existing employees and to actually develop ideas that will avoid a labour shortage,” argues Clist.
“This country is dependent on workers from the EU and the consequences of any restriction on rights would have severe detrimental consequences on pubs and bars, and for that matter the wider economy.”
Case for immigration
While there has been a degree of panic about the impact of Brexit, JD Wetherspoon founder Tim Martin believes it is unlikely that the UK will close its borders to EU workers.
Martin, a staunch supporter of Brexit, still believes that for the country and its economy to be successful, leaving the EU is essential. He says that allowing unelected EU leaders to grant whole countries access to the UK is “unrealistic in the long run”.
“Things will improve once we have democracy and we get out of the EU,” he argues. “I am pro-immigration and feel that we should continue to understand that as a country we need immigration. That is the case that the licensed trade should make.”
He supports a system of working visas for current residents from the EU. “Those that are living here should stay, and there should be a preferential basis for working visas for residents currently in the country,” he argues. “I have been in the industry for 37 years and there has always has been pressure on staffing, especially when unemployment is low – and it is the lowest it has been for 40 years.”
He does not agree with the Government plans to use EU workers resident in the UK as a “bargaining chip” to ensure the rights of Brits living in the EU. “I think it is a tactical mistake not to grant EU workers, legally resident here now, permanent stay immediately. If we did that we would take the moral high ground,” he says.
“I can understand why the Government thinks the same rights should be granted to UK residents living in the EU, but I think if they took the initiative they would put themselves in a stronger position.”
Securing status a ‘priority’
Despite concerns, the Department for Exiting the European Union, told MA that it would make the job of securing the status of EU citizens currently living in the UK, as well as that of British nationals in the EU, a “priority”.
“Over the past nine months, the Government has been engaging directly with businesses up and down the country, including with hospitality sector leaders, to build a strong understanding of the challenges and opportunities that our EU exit brings,” a spokesman says.
“All of that is helping us to build a truly global Britain, one that is tolerant and outward facing. While we will end free movement as it is now, we will design a new immigration system that is in the national interest.”
The Government reassurances are welcome but how much weight they will have when the UK is negotiating its exit remains to be seen.
There is no doubt that a tough challenge lies ahead for the UK to secure the workers that the pub and hospitality trade needs. The uncertainty could see the industry facing one of its biggest employment challenges to date.
With D-Day here, the pressure is on secretary of state David Davis to make this “priority” a reality.