Examination of Witnesses (Questions 340
- 354)
TUESDAY 8 JANUARY 2008
MR BOB
COTTON, MR
ROB HAYWARD
AND MR
BRIAN WISDOM
Q340 Mr Sanders: What plans do you
have to collaborate with London's 2012 volunteer programme, given
the involvement of People 1st with the London Skills Strategy?
Mr Wisdom: First of all, perhaps
I could come back to talk about our approach to 2012 and how we
aim to support the tourism industry into 2012. On the back of
the research we did of 5,000 businesses, we pulled together a
national skills strategy. We worked very closely with the Department
and together with industry on that and we published it back in
March of this year. It lays out a ten point plan for upskilling
the tourist workforce in time for 2012, using that as a milestone
along the way. As part of that, Ken Livingstone also launched
a London version earlier this year. Particularly in the context
Bob has just mentioned of customer service, the great opportunity
is to improve international perceptions of customer service in
this country and tourism, a visitor-facing economy, is in the
frontline of that. People 1st is currently working in partnership
with the London Development Agency and Learning and Skills Councils,
as part of that plan to research world-class customer service,
with the aim of putting in place subsidised customer service training,
widely available to industry, in the two years in the run-up to
2012. That should bring a significant advantage to a lot of businesses
which currently do not have access to that form of training. We
are also looking to ensure that one of the biggest areas of skills
shortages is dealt with appropriately during the next five years.
Currently there are something like 30,000 practising chefs and
cooks in the UK who have no qualification at all and a further
50,000 who have only the equivalent of a basic food hygiene certificate.
That means there is a significant skills shortage in the industry
today and, as we have been hearing, demand for food has been growing.
Whilst the pub sector itself may be in decline, sales of food
within the pub sector are growing and there is increasing demand.
There is increasing demand as a result of social changes for more
authenticity in provenance and for the preparation of food from
scratch. Today we do not have a delivery system of chefs that
meets the demands of the tourism industry. We need to fix that.
To turn to the volunteering programme: that is effectively linked
to another Sector Skills Council, SkillsActive, because a lot
of the volunteers are coming from sports clubs in the UK. There
is a pre-volunteering programme, which is about giving the unemployed
employment skills, and we are contributing to that in terms of
the key fundamentals that people should have when they come into
the hospitality, leisure, travel and tourism business. Some of
those are around giving people the skills in things like good
hygiene and health and safety which are currently not supported
through subsidised education. In terms of 2012 and our approach
to volunteering, our involvement is not that great but, across
the span, in terms of preparing tourism for 2012, we have a significant
strategy in place that is being developed as we speak and I am
happy to give the Committee copies of that strategy.
Q341 Adam Price: The public perception
would be that the hospitality industry generally is at the bottom
of the wages league. Is that a fair assessment?
Mr Cotton: If you are looking
at perception, there are several issues. If you take an employment
payroll of two million, give or take, in tourism, hospitality
and leisure, it obviously exists on a very flat pyramid. A large
proportion of those two million people will be working at the
lowest level and at rates which are minimum wage or just above,
so, yes, a lot of people do work at that level—in the same
way that perhaps the retail sector works as well. On the upside,
for those who start in this sector at the lower level it is relatively
easy to make rapid promotion, and mid-ranking salaries and above
now compare very favourably with those in almost any other industry.
That was not the case ten or 15 years ago. Maybe our failure is
in not getting that message across, that it is not just about
joining the sector for a job but that one can join the sector
for a proper career with good training prospects. It has been
a failure of the industry perhaps to get that message across.
Mr Wisdom: I think there are some
unfair perceptions of the industry. The reality is that 15% of
the workforce are on the minimum wage in these industries. One
in five jobs in the industry are management jobs. That means clearly
that there is a progression route that is very seldom seen and
within our UK skills passport we have opened that up so that people
can see the galaxy of career options that are available to people
in this sector. There is also clearly an issue, which is unusual
in this sector, where some people—I think it is about 14%—do
actually sit below the minimum wage. That is usually driven by
three things. One is the offset of accommodation—because
there is a significant amount of accommodation provided within
the industry. The second is where people are in workplace full-time
training schemes, like apprenticeships. This industry has the
most apprenticeships of any industry sector currently. The third
is the number of young workers below the age of 18 who are working
in kitchens and things part-time. Reality is sometimes not as
bad as it is painted. The truth is that it is a pretty small sector
of the workforce that is at the minimum wage here and the opportunities
and the levels of pay at management level are pretty competitive.
Q342 Adam Price: What you have just
told us contrasts a little bit with the figures that we have seen.
A study by Oxford University, commissioned by the British Retail
Consortium, claimed that 96% of workers in the hospitality industry
earned the national minimum wage. Maybe you could share your views.
Mr Wisdom: That is wrong. Clearly
the fact that one in five jobs are management jobs will tell you
that that 96% cannot be the right figure. I am sure that my colleagues
here would even more strongly—
Q343 Adam Price: Maybe the issue
was whether it was minimum wage or above, so we will check those
figures.
Mr Hayward: I have the study here
and the figures you have there are incorrect. That is a misquote
from it. I will provide the Committee with the full study.
Q344 Adam Price: We are grateful
to you for that. On the issue of the offset of accommodation,
what protection is in this to make sure that people are not being
exploited? Are there standard rates?
Mr Cotton: It comes up every year.
I have been involved in helping set the minimum wage every year
since it was started. In fact I have a nominee who sits on the
Low Pay Commission. In the very first year there was a very strong
view of, as it were, removing accommodation provision altogether—perhaps
driven by the trade union side of tied housing and the problems
you get with tied accommodation. We argued very strongly that
in certain rural hotels and certain areas it was important to
keep that. They did keep it but they only kept it at a certain
level. Every year we have argued to keep it and they have uprated
the set allowance by the increase every year. It is interesting
that with the influx of foreign workers in the last two or three
years accommodation has become a much more important issue. It
is a vital issue now, if you are a rural hotel, particularly,
and you want to get staff, to be able to provide accommodation
of a reasonable quality at a sensible price, otherwise these workers
are priced out of the local market and hotels would not be able
to find labour. It becomes more important to have good accommodation
and the numbers have increased dramatically in the accommodation,
but the rules are very clear as to what you must deduct, how much
you are allowed to deduct, what it must include and what it cannot
include, and it is reasonably strictly enforced. When the enforcers
of the minimum wage go around to hotels, in particular, the first
thing they look for is the accommodation offset and what is being
offset as much as the actual rate of pay itself.
Q345 Adam Price: You refer there
to the increasing importance of migrant workers. Could you give
any figures on that?
Mr Cotton: The figures are what
you make of them. I have done two surveys myself within the last
year amongst my members. I did one in central London within the
last six months—and this includes most of my members in
central London, where probably every branded hotel is in membership,
a very high membership—and 83% were from overseas. 83%.
We broadly think there are about 350,000 people in the hospitality
industry in central London and around 80% are from overseas. If
we look outside London—and I am talking about from Edinburgh,
Glasgow, Bristol, Cardiff—right across the country—probably
60% in our sector are from overseas. This is predominantly from
central Europe but not central Europe alone. There are extraordinary
numbers of French, Spanish, Italian people here as well. They
are from the EU predominantly.
Q346 Adam Price: That covers the
pub sector as well, does it?
Mr Hayward: It does, broadly.
We do not have the capacity to do the detailed stats but experience
shows that we may be marginally lower but we will not be dramatically
different. Bob made the comment earlier on about where is the
split between a pub, pub/restaurant and a restaurant. You are
quite often "struck" in London if you get served by
a British person in either a pub or a restaurant. That does not
mean to say the service is any worse, and in many cases, tragically,
it is better—which is a comment on our society. It is not
just our sector; it is in terms of the service sector in general.
Q347 Adam Price: In terms of the
visitor experience, people are coming to the UK because they are
interested in Britain and British culture. Maybe you could say
that London is a different case, London is a global, cosmopolitan
city, but if they are going to a hotel in Scotland or Yorkshire
or wherever they go and they do not meet anybody who is from that
place, is that a problem in terms of the tourism product?
Mr Cotton: If one is going to
spend a weekend at a hotel in Scotland for a particular experience,
one may argue that one would like to have some Scottish experience,
whether it is the bagpipes playing or a Scottish accent welcoming
you. We find that people want a good value experience—good
service, good food, good accommodation—and to be well treated
and, quite frankly, it is not an issue at all. From front of house
to reception to waiting staff to accommodation staff, you want
people who can deliver good service in a friendly manner, and
to get the price right.
Q348 Chairman: Are you suggesting
that the only way you can do that is therefore by employing Eastern
Europeans?
Mr Cotton: Let me be very blunt
about this: the people we have had from central Europe have been
the best source of labour this industry has had in 100 years.
It has done more for improving standards in this industry than
anything produced from our local schools and colleges, and that
is because of the skills, the motivation and the fact that they
want to work and they want to do the job as best they can.
Mr Wisdom: There are some other
factors involved.
Q349 Adam Price: You have given up
on local workers then.
Mr Wisdom: No. There are some
other factors involved here as well. The first is the demographic
shift which has happened in this country, which means that effectively
70% of the workforce that will be required in 2020 is already
in work and there is a declining young population at this time
in this country. The reality of that in an industry that has a
very high turnover of staff—and this industry has double
the level of turnover of staff of other industries—means
that you do not have that young population. This industry employs
three times the number of young people that other industries employ
in the UK. If that group of young people are not there, where
are you going to fill the gaps from? Clearly an immigrant workforce
becomes almost a necessity. That immigrant workforce happens to
be supplying this country at the moment with people who are more
highly skilled. For example, you will meet lawyers from Poland
serving behind the bar in hotels because they can get employment
here and they cannot get employment in Poland. The reality is
that those workers are unlikely to stay working behind the bar
in the long term and therefore we have to focus at the same time
on our own indigenous population. We have to develop their skills
because the long-term future depends on that indigenous workforce
still being there. In London, I would agree, there are round about
70%—from the figures we have, and we represent travel companies
and tourism companies as well, which is perhaps the reason why
there is a difference—and outside London we are looking
probably at about 15% international workers across the whole range.
Obviously there are many more in the cities. We are still relying
heavily on producing skilled workers from this country too and
in the longer term that will become increasingly important.
Q350 Adam Price: Is the reality that
you have to raise the wage rates, even at the bottom, if you are
going to attract local workers? Eastern European workers may be
attracted by the minimum wage but if you are going to compete
for local workers you will have to take it up to a higher level.
Mr Wisdom: I think it is twofold.
One, you have to create the opportunity, and you have to show
the opportunities that are already there for people to develop.
People do not have to stay on the minimum wage for very long in
this industry. They are not always aware of the opportunities
that are there and they are not always aware of where they can
get the skills to get those opportunities to grow their careers
in the industry. There are some fantastic careers in the industry
to be had—lots of them actually, more than in many others—and
the failings have been in not showing that career development
structure that is available or in not retaining the staff long
enough to give them the opportunity to take those opportunities.
As an industry, certainly moving towards 2012 we need to pay much
more attention to upskilling our existing workforce and enabling
them to take those opportunities that are available to them and
also ensuring that the skilled workers that we are getting from
Eastern Europe—and we should welcome them, because this
is all about having skilled workers in the economy—are also
attracted to stay, so that if I am a lawyer but I can get a really
good career going in this sector then I will stay and take it.
Q351 Philip Davies: I honestly cannot
make neither head nor tail of what you are telling me. You have
said there are not enough indigenous people to fill those posts
yet we are always being told that there are one and a quarter
million 16-24-year-olds in this country who are neither in employment
nor education or training. It strikes me that there is a large
number of people in this country who need jobs who would be perfectly
capable of doing them, so I do not understand that bit. Then we
are told that these people coming in from Eastern Europe or central
Europe are the best thing since sliced bread, yet the People 1st
report said that lots of employers believed that their staff skills
were not up to scratch. Its biggest concerns included communication
skills and language skills and it strikes me that that is going
to be exacerbated by employing more and more migrant workers from
abroad. Then we are going to have this huge amount of subsidised
customer service training for everybody before the Olympics. What
on earth is the point of everybody understanding the niceties
of customer service if you cannot even communicate in the right
language with people? I really do not follow where any of you
are coming from on this.
Mr Wisdom: The People 1st report
you are referring to does rightly highlight—and I think
both my colleagues would agree—that communication skills
and team-working skills are two of the key skills that the industry
is looking for and is not happy that it has today. It is also
true to say that 63% of employers that we have surveyed are not
satisfied that their staff had sufficient customer service skills
to meet the expectations of their customers today. The reality
is that we still have a long way to go in this country on customer
service, irrespective of where the employee comes from. In terms
of language skills, clearly there are some issues created by the
influx of an immigrant population around language skills. Employers
tell us, by and large, that those are very quickly overcome. Indeed,
many employers help their employees acquire those skills very
quickly and are investing in acquiring those skills. Where those
skills are not in place, then clearly those businesses will suffer
as a result. Communication skills are more than just language.
Communication skills are about the ability to work with other
people within business; they are about the ability to be able
to put yourself in someone else's shoes and the ability to articulate
what the needs of the customer are. It is those issues that industry
wants addressed. That is not really an issue around where the
workforce is coming from.
Q352 Philip Davies: What is wrong
with one and a quarter million 16-24-year-olds who are literally
sitting on their backsides doing absolutely nothing? What is the
problem with those people? Are they unemployable or do they just
not want to work in your industry?
Mr Wisdom: I will give you one
example why some of those people are not finding work in our industry.
If you want to work in a commercial kitchen, there are some fundamental
things you need to have. You need to have some communication skills,
you need to have a basic food hygiene certificate, you need to
have a health and safety certificate. If you look at how those
people are being prepared to work by Jobcentre Plus or whatever,
you will find none of those things being given. If someone had
come to me when I was running a restaurant chain a few years ago,
unemployed, with those things in their hands and said, "Give
me a job" I would have given them a job.
Q353 Chairman: If I arrived here
from Lithuania I would not have any of those things.
Mr Wisdom: No, you would not and
most of our employers would then train people to do it. But if
the individual is not self-motivated enough to go out and find
those things—which I think is probably the point Bob will
make in a minute—that is the key difference. Someone coming
in from Lithuania is very driven to get that training.
Q354 Mr Evans: This is quite damning,
is it not?
Mr Hayward: Yes, it is.
Mr Cotton: I would go back to
the point that we are working with the Work & Pensions Department
to give an opportunity to 15,000 youngsters on the east side of
London, to try to get some of these 16, 18, 20-year-olds into
job experience by giving them 28 days' experience. We find that
the biggest problem is the motivation issue. People have to want
to turn up every day to do the job. Secondly, we have to look
at the benefits system at the bottom end of the market. A guy
coming here with his family from central Europe is strongly motivated
to want to improve himself or maybe send money home. He is highly
motivated to do something. The local people, we find, do not have
the motivation to turn up each day and, quite frankly, once they
have worked more than 15 hours a week their benefits start to
be removed, so there is no motivation to work more than 15 hours.
Against that there is the migrant labour. Those are the two key
issues. It is this motivation issue. I agree with Brian: in the
long term we have to find a way that motivates those people to
get involved, to get engaged in work. That is a challenge for
us all. But if you are an employer with a very keen person from
Poland who is bright, smiling, wants to work, turns up every day
and will work 45 or 50 hours a week set against a person who turns
up one day, does not turn up the next day, is not really interested,
it is a no-brainer. That is the challenge. That is the challenge
for you as well as ourselves.
Chairman: That could lead on to an entire
day's debate on welfare reform but I think we should probably
end it there. Thank you very much.
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