Memorandum by the British Hospitality
Asosciation
1. The British Hospitality Association is
the national association for the hotel, restaurant and catering
industry. Our members operate some 40,000 establishments employing
over 500,000 people. Overall, the hospitality industry, including
those services where hospitality is not the primary purpose (eg,
education), employs some 1.64 million people (source: Labour Force
Survey 2005). Excluding such services, employment in mid-2006
was some 1.23 million.
2. At any one time, the industry has an
estimated 100,000 vacancies. Jobcentre Plus generally records
around 35,000 to 40,000 vacancies at any time. It also has around
400,000 vacancies notified to it each year across the main occupations
(managerial, chefs, hotel porters, catering assistants, waiters
and bar staff).
3. Turning now to the questions in the Call
for Evidence;
4. Question 1 (Numbers and characteristics):
Recent migrants will be made up of four groups: those from the
European Union, notably the "A8" Accession Countries;
those on Work Permits for skilled workers; students and those
here on such schemes as TWES (Training and Work Experience Scheme)
and the Young Holidaymakers' Scheme; and, inevitably, those working
illegally. We do not have access to any data other than those
produced by, or estimated by government. These indicate that,
from May 2004 to June 2007, just over 127,000 A8 workers registered
under the Worker Registration Scheme that their first UK job was
in hospitality. The number of work permits issued for hospitality
occupations has averaged around 12,000 a year, but the number
has been tailing off, an issue we return to later.
5. The numbers arriving into hospitality
occupations under student, TWES and Young Holidaymaker arrangements
are not known to us, nor are the numbers of illegal or "irregular"
workers.
6. It was assumed that the number of A8
arrivals would be low and that their length of stay would be short.
Oxford University research using June 2006 Labour Force Survey
data suggests that, of the 1.23 million employees of hospitality
businesses (see above), some 21.5% were born outside the UK. A8
countries counted for 2.9%, about 35,000, ie just over a third
of the 90,000 hospitality WRS registrants to that date. It seems
that either A8 hospitality workers were leaving the industry to
work in other sectors or were returning home, but the anecdotal
evidence does not support the theory that most have left in these
ways.
7. Question 2 (Sectors and Occupations):
Migrant workers (defined as those not born in the UK) represent
a third of the workforce in restaurants, a fifth in hotels and
just a twelfth in bars. Again, a third of chefs/cooks in the industry
are non-UK born and more than a third of these describe themselves
as Asian or Chinese. It is very hard to assess how migrant workers'
labour market outcomes differ from those of "local"
workers, though the Committee is no doubt aware of the IPPR report
Britain's Immigrants: An economic profile, which has just
been published and which raises a number of interesting conclusions.
8. Question 3 (Why do employers want to
hire immigrants?): As indicated above (paragraph 6), over 20%
of hospitality workers were born outside the UK, compared with
just over 10% of all workers (source: IPPR report, table 4.1).
We think there are three main reasons for this: first, as a specific
reason for this industry, the increased popularity of ethnic cuisine
is dependent on a flow from the relevant countries of chefs in
particular. Of 6,626 chefs of all grades granted Work Permits
in the year from October 2006, at least two thirds (we do not
have a complete analysis) came from Asia.
9. Secondly, the hospitality industry is
one which offers easy to find "entry level" jobs which
do not generally require a high level of trained skill or complex
and lengthy recruitment processes; those entering a job market
for the first time, whether as migrants or students from the domestic
economy, are likely to gravitate to these jobs. A long standing
example is bar work, traditionally taken up by many of those entering
the UK on the Young Holidaymakers Scheme.
10. The third reason why hospitality workers
from overseas are recruited is because, in many cases, they are
seen as having more to offer than the domestic workforce. There
are many anecdotal stories about the high quality of many A8 workers.
As the IPPR report concludes, "it would seem that the average
immigrant has better economic characteristics than the average
UK-born person." The hospitality industry has gained from
this because, again to use the example of Poland, those working
here have had on average higher levels of education than UK workers.
They will be a little older than UK entrants to the labour market
and will have developed more of the "people" skills
which are essential to the provision of good service standards.
11. The obvious alternative to immigration
to reduce labour shortages would be a greater supply of young
British-born people willing and ready to take jobs in hospitality.
For example, only 11% of UK-born people are aged 16 to 24, but
22% of those living here but born in Poland are in this age group.
Contrary to popular perceptions, the industry can offer good career
development prospects compared with more popular sectors like
"media". For years, the industry has supported Springboard
UK, which helps to encourage not only young people, but also groups
such as women returning to the labour market after a long absence,
to take hospitality jobs. We are in discussion with Jobcentre
Plus about renewed schemes to make it easier for young people
currently not in work to be trained and offered work opportunities
with a view to permanent employment in hospitality.
12. (Question 4: Impact on the labour market):
Taking wages first, Low Pay Commission research indicates that
around 15% of hospitality employees are paid at minimum wage rates
and that, especially since 2004, differentials (between lowest
quartile and median earners) have narrowed. In our view, this
is because, once employers have raised wages to meet minimum wage
rises, there is not enough in the kitty to reward higher paid
workers. We do not think this has been affected by, or has affected
immigration.
13. There is evidence that the number of
jobs in hospitality fell by 25,000 in the year to mid-2006 (source:
Low Pay Commission) just at the time that the inflow of A8 workers
into the industry was at a high level. This indicates at first
glance that low paid UK-born workers' jobs were doubly squeezed,
though the Low Pay Commission's conclusion was that the jobs lost
were at supervisory and management levels, particularly in the
bar trade (LPC 2007 report, paragraph 3.31).
14. (Question 5: Illegal Immigration): We
have been involved with the Home Office's Illegal Working Group
for several years, during which time evidence has emerged suggesting
that, across the whole economy, there may be some 500,000 illegal
or irregular workers. There is no doubt that many of these will
be working in hospitality and a high probability that they will
be paying for their illegality by having to accept lower wages
than the minimum wage. We support enforcement both of the laws
against illegal working and of the law to compel payment of the
minimum wage (though, ironically, the latter does not protect
illegal workers) because we do not want to see employers who obey
the law undercut.
15. (Questions 12: Migrants' skills; government
migration and labour market policies; and 14: Points Based System
and skill shortages): The number of hospitality industry Work
Permits issued in the last six quarters (starting in April 2006)
has been, respectively, 3,049; 2,893; 2,753; 2,456; 2,265; and
2,105. The number of these issued for "chefs" has been,
respectively, 1,525; 1,494; 1,466; 1,247; 1,065; and 1,007. These
reductions appear to be due to a number of factors, including
some inconsistency between different parts of Work Permits UK
and a generally tougher attitude to applications at this level.
16. The introduction of Tier 2 of the Points
Based System, expected around October 2008, will, we think, reduce
further the number of non-EEA hospitality workers permitted to
enter the UK, particularly at "Chef de Partie" (NVQ3)
level. The points system, as currently envisaged, would require
such chefs to be paid at least £22,000, well above the current
levels (except perhaps in parts of London). The alternative, that
the Migration Advisory Committee might recommend chefs as a shortage
sector, thus bypassing the salary requirement, is uncertain until
the Committee starts work.
17. A further complication, which we have
raised at senior level, is that Tier 2 workers will require a
high standard of English at entry, which many, maybe most, ethnic
chefs simply do not have. We therefore face the possibility of
the supply of ethnic chefs drying up under the Points Based System.
It is unclear what labour market policy could be introduced to
resolve this.
18. We understand that, until Romanian and
Bulgarian workers receive the same entry rights to the UK as those
enjoyed by A8 workers, any low-skilled (Tier 3) scheme will have
to be restricted to those two countries. In the long term, we
think it unlikely that the government will be sympathetic to demands
for Tier 3 schemes, though there might be an easier case in relation
to additional demands for workers around the time of the 2012
Olympic and Paralympic Games. In any event, the rise in youth
unemployment in the UK demands an imaginative response and we
mention above (paragraph 11) discussions between this association
and Jobcentre Plus to assist, in particular, young jobless people
to obtain permanent jobs in hospitality.
2 October 2007
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