Could the rise in net migration help the hospitality sector tackle its skills shortages?


Figures published by the Office of National Statistics (ONS) at the end of May 2023 showed net migration into the UK in 2022 as being at a record high of 606,000 (a 24% increase on 2021), despite the end of free movement and the introduction of a new points-based immigration system in January 2021.

Could the current rise in immigration alleviate the post-Brexit and post-COVID labour and skills shortages that are crippling the hospitality sector?

CIPD's report

According to a recent report of the Chartered Institute of Personnel and Development (CIPD), the short answer is: no.

Looking beyond the headlines, the CIPD report points out how the ONS data suggests that migrant workers make up less than one third of the long-term international migration to the UK and that two thirds of the total immigration figure is driven by non-EU nationals, of whom just 21% arrived on work visas.

Since January 2021 there has been a drop in EU nationals working in the UK (from 7.8% to 7.4% of the workforce) but a rise of non-EU nationals (from 4.4% to 5.7% of the workforce), driven in particular by the increase in Asian nationals. However, the sectors where Asian new arrivals wish to or are able to work do not offset the losses from EU-prevalent sectors.

The report also highlights how Brexit has exacerbated skill and labour shortages in a range of sectors, including hospitality. The new points-based immigration system enables economic migrants to qualify for work visas based on a number of 'points' that they have to acquire, and includes a route for skilled workers with a job offer from an approved employer sponsor. This new points-based system is attracting highly qualified workers, but is also likely to lead to problems in filling more unskilled roles, previously filled by migrant labour, due to the costs attached to sponsoring migrant workers. UK companies have to pay to sponsor workers from abroad (immigration skills surcharge) and not all "unskilled" roles are able to be sponsored.

In addition to this, the CIPD report highlights that, when considering labour supply, it is important to consider hours worked as well as numbers of people. According to the data, the average UK worker’s total hours in 2022 was 31 per week, while for EU nationals it was 32.8 hours per week – that is, across the whole economy, each EU national worked 6% more hours than their UK counterpart.

Hospitality Sector

Hospitality businesses used to be most reliant on EU nationals with lower level qualifications (with EU migrants accounting for 15% of the hospitality workforce before Brexit, now down to 9.4%). Because non-EU migrant workers tend to work in other sectors, the increase in numbers only mildly alleviates the labour shortages for these businesses.

As for hours worked, for every four EU national workers in hospitality, businesses would need more than five UK national workers to take their place to have the same number of total hours worked a week. Combining this with the estimated shortfall of workers in hospitality, this means that 29% more UK workers would be required to fill this gap in hospitality alone.

The Government's approach

Despite a petition last year calling for a hospitality worker visa scheme, the Home Office said there were no plans to introduce a visa route for recruitment and that businesses should invest in and develop the UK's domestic labour force.

On request of the Home Secretary, in March 2023 the Migration Advisory Committee (MAC) published an interim review of occupations in the construction and hospitality sectors.

For the hospitality sector, MAC did not recommend that any low skilled occupations be added onto the skilled workers occupation list or the shortage occupation list (SOL). According to MAC, there was no substantial evidence to prove that shortages in hospitality could not be filled with domestic recruitment.

It recognised that many occupations in this sector are low-skilled, and therefore concluded that the UK Government required to make an exceptional argument that migrant workers should be used to alleviate labour and skills shortages.

Following the end of free movement of labour from the EU, the Government has, however, lowered the skills threshold for sponsorship in an attempt to address the skills shortage in roles deemed more unskilled.

What is next ?

In the short term, employers in the hospitality sector could hire EU citizens with a right to stay in the UK under the EU settlement scheme or rely on niche immigration routes (such as the youth mobility scheme and the Graduate visa).

Longer term, operators and trade bodies will need to make a case for sector-related lower-skilled occupations to be included in the SOL, invest more in the skills of their UK-born workforce (which is one of the intended aims of the new immigration system), turn to technology to fill the gaps or – for those who can afford it – consider an overall improvement of employment terms.

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Total long-term immigration was estimated at around 1.2 million in 2022, and emigration was 557,000, which means migration continues to add to the population with net migration at 606,000; most people arriving to the UK in 2022 were non-EU nationals (925,000), followed by EU (151,000) and British (88,000)
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