If the industry’s workforce is to expand, productivity levels will need to increase, says Peter Ducker FIH, chief executive of the Institute of Hospitality
One of our industry’s most publicised aims – repeated this week at the British Hospitality & Tourism Summit – is to create 300,000 new jobs by 2020. That’s some 43,000 new jobs every year for the next seven years. How feasible is this? Even in the heady period of economic growth between 2000 and 2008 the UK accommodation and food service workforce only increased by an average of 22,200 per year. Could this period of expansion be repeated and even doubled in the next seven years? It seems unlikely.
In the last few years of high unemployment (disproportionately amongst the young), it is easy to understand the reasons behind stating such goals. But would such growth even be desirable?
Labour is the greatest cost item in every hospitality business and it is again on the rise, particularly in light of new auto-enrolment pension obligations. No employer is going to create a new job simply for the sake of it.
Successful businesses are therefore continually striving to achieve higher levels of productivity. It is the golden thread that separates success from failure. Statistics, however, show that productivity varies massively in our industry. Research highlighted in a new publication Hospitality Digest 2014 shows that in the UK hotel sector, sales revenue varies between £2.14 and £18.44 for every £1 spent on labour.
In the rush to be active in job creation, little mention is ever made of the industry’s productivity levels. Can we really create so many new jobs when there is a big question mark over how efficiently employers use their existing staff? According to People 1st there are some 400,000 hospitality staff (some 20 per cent of the total workforce) who do not have the full range of skills required. In his article in Hospitality Digest 2014, Miles Quest says this is a situation exacerbated by the industry’s high levels of labour turnover. Staff are not employed for long enough to develop the skills they need; nor are sufficient operational staff progressing to management roles.
Of course, the hospitality industry is in an expansionary mode and new outlets are opening every day (though many are closing – over 4,000 hotels and some 8,000 pubs since 2004). The danger lies in creating new jobs when existing workers are insufficiently well-trained to fulfil the jobs they already have.
If the existing workforce is working at only 80 per cent capacity or less, as the evidence suggests, recruiting more and more workers will not make the industry more efficient, which must be the ultimate aim if profitability is to be maintained.