Food and drink manufacturing data includes alcohol: Data sources: ONS, Annual Business Survey 2015 and Her Majesty s Customs & Excise.

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1 FDF Migration Advisory Committee (MAC) Response Introduction 1. The response to this consultation has been put together in collaboration with FDF members, the FDF led Food and Drink Workforce Strategy group 1, and the Food and Drink Industry EU-Exit roundtable and we will be providing more data on future workforce projections from a survey later in the year (annex 1). Also present at both groups have been officials from a range Government Departments. Overview of UK food and drink Manufacturing: 2. The food and drink industry is the largest manufacturing sector in the UK. With our food chain partners, we provide employment for nearly four million people and contribute 108 billion in GVA 2. Food and drink manufacturing alone directly employs almost 400,000 people with a GVA in excess of automotive and aerospace combined - and export sales of around 20 billion a year UK food and drink manufacturers support and drive growth in many parts of the value chain. From the research community, renewable energy sector, farming and machinery manufacturing to retail, digital and marketing services, our industry creates a multiplier effect by providing a platform enabling these sectors to grow. Food and Drink Landscape: 4. Food and drink manufacturing is the largest employer in the manufacturing sector but we face a large and looming skills gap, which is coupled with an increasingly aging workforce. By 2024, a third of our workforce will retire and we will need a 140,000 new recruits by then just to stay level. This is compared with the automotive sector which is forecast to require 27,000 and aerospace will require 15, Whilst the skills and labour problem pre-dates the decision to leave the EU, it has undoubtedly brought this into sharper focus at a much quicker rate, with an ever tightening labour market. The food and drink sector accepts the result, and the lessons on migration from the referendum but changes must be done in a way that does not force business into a cliff-edge scenario, adjusting to a new system over night. 6. The food and drink manufacturing industry has a long-standing image problem, with potential applicants, young people and their influencers viewing the sector as a low skilled, low-tech, low pay industry without opportunity for 1 Workforce Strategy Group membership: Association of Labour Providers, British Beer and Pub Association, British Hospitality Association, British Retail Consortium,, Fresh Produce Consortium, National Farmers Union. 2 DEFRA Food Statistics Pocketbook, Food and drink manufacturing data includes alcohol: Data sources: ONS, Annual Business Survey 2015 and Her Majesty s Customs & Excise. 6 th Floor 10 Bloomsbury Way London WC1A 2SL Tel: +44 (0) Registered office as above. Registered in London with limited liability. Certificate of Incorporation no VAT number: The seeks to ensure that information and guidance it provides are correct but accepts no liability in respect thereof. Such information and guidance are not substitutes for specific legal or other professional advice.

2 progression. The image problem is not exclusive to food and drink manufacturing and we are aware of challenges being faced by manufacturers across the board. However, without exposure to the industry young people fail to understand what roles such as Food Engineer entail. With existing careers guidance focussed on more generalist routes and young people are been steered away from specialised educational routes, competition from other industries means food and drink businesses are struggling to recruit across the board, from engineers to brand managers, food technologists to shift operations managers. The image issue is further compounded by challenges around STEM education and lack of interest in these key skills from young people. STEM skills need to be ramped up in schools and better linked to careers education to enable young people to visualise the fantastic employment opportunities which use these particular skills. 7. The industry recognises that it must do more to recruit local talent in the area they operate. But, it is important to note that there is no overnight solution to skills and labour gap our industry faces. It will take time to develop and see the results of the initiatives. It takes significant resource to train key skills like engineers and there needs to be a recognition of this. 8. A significant step change is required in how the UK goes about technical and STEM education to address the structural barriers that remain present. The food and drink sector is, unlike other industries, spread right across the country, with no real cluster. Whilst this is a positive in many aspects, it has meant that creating a critical mass for training providers in apprenticeships is difficult. Different companies often fail to identify common issues in terms of workforce training needs and therefore fail to identify opportunities to work together to build a critical mass of learners able to engage a training provider to invest and offer the appropriate sector specific learning. 9. Where companies have been unable to find the right training locally, food and drink manufacturers have had to seek out alternative solutions. They have either had to invest in more generalist qualifications supported by further investment in sector specific training in house or they have created companyspecific training schemes. Companies have also benefited from access to EU workers with the appropriate skills levels to fill gaps. 10. UK food and drink manufacturing has successfully expanded production and productivity to meet rising demand, generating growth and jobs and providing a core market for UK farmers and fishers. Consumers have seen prices fall in real terms for several decades, while quality, choice and innovation have all increased. For the majority of households, food and drink now account for a smaller share of total disposable income than ever before. However, without our valued workforce, none of this would have been possible. Whilst we respect the lessons from the referendum, is it crucial that our current workforce is not harmed by this process. 11. The food and drink manufacturing sector recognised the lessons from the referendum and see the opportunity to restore the public s confidence in the immigration system and spreading wealth across the nation. We will continue to work with Government to achieve this. 2

3 Disclaimer: Data from our Grant Thornton, FDF Economic Contribution and Growth Opportunities survey refers to Food and Drink manufacturing. Data from the Breaking the Chain survey and report refer to data from the food and drink supply chain workforce group. 4 EEA Migration Trends: Part 1 Please provide evidence on the characteristics (e.g. types of jobs migrants perform; skill levels, etc) of EEA migrants in your particular sector/local area/ region. How do these differ from UK workers? And from non-eea workers? Number of EU nationals: Table 1: Number of permanent workers employed in the UK in 2016 (of respondents from Food and Drink Supply Chain Workforce Survey) Permanent workers Total Food and Drink Supply Chain Workforce survey (Non-UK) EU nationals from survey 34% Non-EU nationals from survey 6% Source: Food and Drink Supply Chain Workforce Survey Notes: Based on 98 responses (roughly half of responses came from food and drink manufacturing) 12. According to the Food and Drink Supply Chain Workforce survey, on average 34% of the permanent workforce of survey respondents across the food chain were EU workers while 6% were non-eu workers As such, these survey figures are broadly in line with official ONS statistics for food and drink manufacturing, which show that 30% of total food and drink manufacturing employees are EU nationals and 4% are non-eu This data outlines that EU nationals make up a significant proportion of the workforce in food and drink manufacturing, playing an incredible valued role in food production. 4 Workforce Strategy Group membership: Association of Labour Providers, British Beer and Pub Association, British Hospitality Association, British Retail Consortium,, Fresh Produce Consortium, National Farmers Union. 5 Due to the composition of the respondents of this question in the survey, these numbers are swayed by the manufacturing sector. 6 Annual Population Survey 2016, ONS, ad hoc report released on 14th June

4 EU nationals and skill levels: 15. As outlined previously, there is a common misconception that the food and drink manufacturing sector is low-skilled and low pay, and a labour intensive workplace. In reality, the industry contains a large number of highly skilled roles and many businesses are highly automated. In a Grant Thornton survey report commissioned by FDF, the skill levels can be broken down evenly into 7 ; a third of the workforce (30.8%) surveyed were of low skill (requiring little or no experience NVQ level 1-2) a third of the workforce (36.7%) were of semi-skill (requiring some experience and training required NVQ level 3-4) A third of the workforce (32.5%) were of high-skills, which could be broken down to; a. Skilled (24.1%) (requiring a degree and experience NVQ level 5-6) b. Highly-skilled (8.4%) (requiring a postgraduate degree/phd or professional qualification NVQ level 7 or above). 16. These skill levels of the food and drink manufacturing workforce can be broken down by nationality if we use education levels of EEA nationals as a proxy for skill level. EU workers make up 38% in roles that require no qualifications, but this does not mean that these EU nationals are unqualified as it does not take into account the qualifications they may have gained abroad. When looking at the other end of the skills spectrum, 19% of those working in highly skilled roles are EEA nationals. Anecdotal evidence from FDF s commissioned Grant Thornton work highlights this In the UK we have an R&D team staffed by 12 people of the 12 people, six have come from Spain. 7 June 2017, Grant Thornton, FDF Economic Contribution and Growth Opportunities 4

5 EU nationals by role and difficulty to fill 17. EU nationals are employed in many roles throughout our members operations. In the Breaking the Chain survey, respondents were asked what roles were currently performed by EU nationals: Factory worker 69% Technical / Quality control 67% Packhouse and distribution 60% Machine operative 59% Process operative 53% Supply chain / logistics 48% Production management 48% Machinery driver 42% Engineering Back office functions (e.g. finance, HR, legal, marketing etc.) Preparation - meat/fish butchering/filleting 28% 42% 40% New product development 24% Procurement 24% Research and Development 23% Sales 20% Source: Food and Drink Supply Chain Workforce Survey Notes: Based on 108 responses, respondents were able to tick all options that apply 18. As the graph illustrates, EU nationals are required for a number of roles, but are primarily in factory based and technical roles, along with two fifths of respondents stating that they require EU nationals in engineering roles. 5

6 Production Management Quality Technical Logistics Supply Chain Engineering Finance Product Development R&D Marketing Sales Procurement HR Health and Safety Communications/PR Agriculture 0% 10% 20% 30% 40% 50% 60% Source: FDF, Food and Drink Manufacturing EU Workforce Report and Survey, December The Breaking the Chain food and drink supply chain data, as seen above, is broadly in-line with data from FDF s own survey conducted in December In this survey food and drink manufacturers were asked what roles were EU nationals most likely to be working in. The roles most common for EU nationals were factory based, and likely to be of a technical or engineering focus. 20. Both of these survey data-sets are reinforced by the EEF s (Engineering Employers Federation) own survey 9 to general manufacturing companies. This survey found that among the roles most likely to be filled by EU nationals were process, plant and machine operatives (64%) and associate professionals and technical/engineers (40%). 21. Furthermore, whilst the food and drink sector has been categorised as an industry reliant on EU nationals for cheap labour, data would suggest the problem is more complex. When food and drink employers are looking to they do not distinguish between EU nationals and UK nationals, they recruit based on the market and suitability for the job. The most likely reason for EU nationals in certain roles is due to be a lack of availability in the resident labour market to fill these roles. 8 FDF, Food and Drink Manufacturing EU Workforce Report and Survey, December EEF, Making Migration Work for manufacturers: Accessing Skills in a Post Brexit Word, June 2017: 6

7 22. Food and drink producers responding to a survey, on the economic contribution of the sector, reported that engineering and technical & quality control were among the hardest to recruit for. 87% of the respondents stated that engineering roles were very difficult or difficult to fill, while for technical and quality control roles the corresponding figure was 64%. 23. These trends are reflected across the manufacturing sector as well. EEF s survey 10 on general manufacturing showed that almost two-thirds of manufacturers employ EU nationals because in their location there is an insufficient number of UK nationals applying for those roles. In the same survey one third of respondents said that the resident population did not have the skills required for the roles. Regional variations of EU nationals: 24. Food and drink manufacturing is a unique sector in that it spreads right across the country, with a presence in every constituency in the UK, as opposed to other manufacturing sectors, which tends to cluster, such as automotive manufacturing in the East Midlands Source: Food and Drink Supply Chain Workforce Survey Notes: Based on 213 responses, respondents were able to tick all locations that apply 25. The graph above highlights where respondents to the Breaking the Chain survey employ most of their workers in the UK, and confirms that employment is spread right across the UK. The numbers above the bars represent the number of respondents who selected each location, as opposed to the number of workers present in each region. 10 EEF, Making Migration Work for manufacturers: Accessing Skills in a Post Brexit Word, June 2017: 7

8 26. Not surprisingly, EEA nationals are employed in food and drink manufacturing businesses right across the country, as shown in the table below from the Grant Thornton report looking at the regions with the highest proportion of EU nationals in food and drink manufacturing: Top 10: Nationally Top 10: Outside of London Area Region Area Region 1 Corby East Midlands 1 Corby East Midlands 2 Boston East Midlands 2 Boston East Midlands 3 Haringey London 3 Breckland East of England 4 Newham London 4 North East Lincolnshire Yorkshire and Humber 5 Brent London 5 Leicester East Midlands 6 Ealing London 6 Slough South East 7 Kensington and Chelsea London 7 Peterborough East of England 8 Breckland East of England 8 Blackpool North West 9 North East Lincolnshire Yorkshire and Humber 9 Blackburn with Darwen 10 Merton London 10 Kingston upon Hull North West Yorkshire and Humber Source: Grant Thornton, Economic Contribution of the Food and Drink Industry, P The industry statistics give a macro-level picture of how many EEA nationals are working in food and drink. There are also some areas within the country that are going to have a higher proportion of EEA national than most due to demographic factors. As illustrated in FDF s Grant Thornton Survey by one member who outlined that when it comes to immigration you can get an industry average but some factories will be more exposed than others due to demographics. To what extent are EEA migrants seasonal; part-time; agency-workers; temporary; short-term assignments; intra-company transfers; self-employed? What information do you have on their skill levels? To what extent do these differ from UK workers and non-eea workers? 28. As outlined in the Breaking the Chain report, there has not been any research on the levels of temporary labour within the UK for food and drink processing and agriculture since Furthermore, the Environment, Food and Rural Affairs Committee (EFRA) report (published on 27 April 2017) feeding the 11 University of Cambridge, Temporary Workers in UK Agriculture and Horticulture; A study of employment practices in the agriculture and horticulture industry and co-located packhouse and primary food processing sectors 8

9 nation labour constraints inquiry highlighted the need for data on short term and temporary work: it is apparent that the statistics used by the Government are unable to provide a proper indication of agriculture s labour needs. These statistics and their utility for measuring supply of, and demand for, seasonal labour must be reviewed by the end of 2017 to give the sector confidence in the adequacy of the official data on which employment and immigration policies will be based for the period after the UK leaves the EU. 29. For an immigration system to work for business and the public it needs to be evidenced based, something that is lacking on the seasonal and temporary workers side. We recommend that Defra conduct new research on temporary work by the end of 2017, to ensure the adequacy of the official data on which employment and immigration policies will be based. Seasonal and Temporary Workers: 30. In addition to EU workers employed on a permanent basis, the food and drink supply chain also relies heavily on EU seasonal, temporary and agency workers. For example: According to research by the British Growers Association, around 80,000 seasonal workers are needed in the horticulture industry. The poultry meat sector also needs up to 13,000 seasonal workers in the Christmas period primarily in the processing of turkeys. A majority of these (58%) would be from outside the UK Whilst we do not have data for overall numbers, the Breaking the Chain survey found that on average 40% of temporary workers are employed for the seasonal peak or peak periods. On average a quarter were moved onto permanent employment within the respondent s company. 32. However, according to the Association of Labour Providers (ALP) EU nationals generally make up between % of workers supplied by labour providers. Form this we can take that the majority of those working in the seasonal peak to provide the food and drink products around peak times like Christmas and Easter are likely to be EU nationals. Intra-Company Transfer (ICT) 33. Many international food businesses see significant value in using ICTs to share best practice across their global operations and to provide development opportunities for their staff. This applies at all levels, and indeed one of the benefits of the free movement of labour across the EU is that the cost of ICTs between EU businesses is much lower than for ICTs outside the EU. 12 NFU Access to Labour Survey,

10 34. For example, one of FDF s members organises approximately ten secondments between its UK and EU based operations each year. There have been material economic benefits in both the UK and EU businesses as a result. One UK national, who went to the EU business for six months, introduced an idea to the EU business during this time that generated annual savings of some 300,000. The same employee then returned to the UK, where he brought back an idea for a process change that has saved the UK business some 200,000 each year. Our member believes that these benefits would not have arisen had this secondment not occurred. Are there any relevant sources of evidence, beyond the usual range of official statistics, that would allow the MAC to get a more detailed view of the current patterns of EEA migration, especially over the last year? Have the patterns of EEA migration changed over time? What evidence do you have showing your employment of EEA migrants since 2000? And after the Brexit referendum? Are these trends different for UK workers and non-eea workers? 35. Whilst the UK has not left the EU yet, the referendum decision is already seeing the effect within the food and drink supply chain. The Breaking the Chain workforce survey (which took place from March to May 2017) shows that since the referendum just under half of respondents reporting that EU nationals within their workforce are considering leaving, and a third have reported that some EU nationals have already left. Three-quarters of employers are concerned about their right to remain. EU nationals are concerned about their right to remain in the UK 73% EU nationals are considering leaving 47% Difficulties in filling vacancies 33% EU nationals have left 31% No change 21% EU nationals seeking pay increases (to offset impact of devaluation of sterling) 17% Some workers have expressed concern about undertaking business visits or working temporarily in other EU member states 9% Source: Food and Drink Supply Chain Workforce Survey and BRC Survey 10

11 Notes: Based on 132 responses 13, respondents were able to tick all options that apply 36. A survey from the Association of Labour Providers (ALP) reinforces the findings in the Breaking the Chain report. The July survey results show that further reductions of EU labour have made recruiting significantly more difficult. A third of labour providers do not expect to be able to source and supply sufficient workers for the remainder of the summer 2017 peak, up from 21% in February. Just under half reported that they do not expect to be able to source and supply sufficient workers for the Christmas peak and two thirds reporting that they have had to invest more money and resources into sourcing labour having to pass on the costs to their customers. With 70 % of ALP members providing labour for food and drink growers and manufacturers, this will have a significant effect on the cost and supply of labour, even under freedom of movement. 37. It is important to note that the Breaking the Chain survey ran through the duration of March to May 2017 going from before the Article 50 notice was given and in the early periods of negotiating. Therefore, there is no data to record the impact of the recent announcements on this subject. Have you conducted any analysis on the future trends of EEA migration, in particular in the absence of immigration controls? 38. FDF does not currently have any detailed data regarding future workforce needs. However, the Food and Drink Workforce Strategy Group will be conducting a future workforce survey looking at turnover of staff and the average age of workers in the food and drink supply chain. As agreed with the MAC, this will be submitted before the end of 2017, for consideration as part of this consultation. A draft survey can be found in annex Recent data from the Breaking the Chain survey found that the turnover figure for all staff within the food and drink supply respondents was on average, 15% per year. Furthermore, respondents to the survey estimated that the size of their own workforce would increase on average by 11% in the next two years. 40. Furthermore, official data from UKCES shows that food and drink manufacturing is expected to see a third of its current workforce retire by 2024 and needs 140,000 new recruits to fill this looming labour gap by Given the forecast reduction in the size of the UK population of working age 14, it is difficult to see how this gap can be filled without at least some level of access to EEA nationals. This looming skills and labour gap does not take into account the growth of the workforce expected. 41. Whilst the industry recognises that more needs to be done to upskill our home-grown talent to fill these skills and labour gaps, there needs to be a recognition that we need migration to address looming demographic changes. By 2022 we will have 700,000 fewer people between 16 and 59, but just 13 This includes 123 responses from Food and Drink Supply Chain Workforce Survey and 9 responses from food retailers as part of the BRC survey. 14 March 2017, ONS, Overview of the UK Population 11

12 under 4 million people of 50 and above 15. Given that in food and drink manufacturing alone, over a third of our workforce is set to retire by 2024 and we will need 140,000 new recruits to fill this. Case Study: The severity of the problem is highlighted by Mercer 16 ; a global consultancy firm has analysed a number of scenarios in the event of a reduction in numbers of migration. The report outlines four scenarios looking up to 2030; The base case scenario: This scenario is based on the core migration scenario from ONS population projections, including pre-brexit migration assumptions. Projections assume that net migration will fall progressively from current levels of 335,000 per year to 185,000 per year from 2020 onwards. The UK population grows by 8% (5.5 million), with the workforce population by 5% (1.7 million). 100,000s scenario: this scenario is also based on the ONS core migration scenario; however, projections assume that net migration falls to 100,000 from 2020 onwards, mirroring stated government policy in recent years. Here the population raises by 7% (4.5 million) and the workforce only raises by 3% (1 million). 40,000s scenario: This scenario is also based on the ONS core migration scenario; however, projections assume that net migration falls to 40,000 ( the tens of thousands that the government recently pronounced) from 2020 onwards. It reflects the likelihood of workers moving back to the EU due to tighter migration policies. In this case the population grows by 6% (3.7 million) and the workforce grows by only 400,000. Great EU re-migration scenario: This scenario assumes that EU workers leave the country and net migration rapidly turns negative before Between 2017 and 2018 we assume net migration is zero and from thereon we assume it falls to - 50,000. By 2030, this results in 1.8 million EU-born workers, a figure last seen in In the final scenario the population grows by only 3% or 2.3 million. The workforce drops by 700,000 over the period of time compared to the base case scenario, the workforce is 2.5 million less or a full 7% less. It is also important to note that under the base case scenario the number of over 65s in the UK increases significantly, rising by 30% to 15.2 million in This scenario based report highlights the need for immigration. The data shows that the UK workforce is aging at a considerable rate, which is already posing problems for food and drink manufacturers even with freedom of movement in place. When, as signalled by the Government, freedom of movement comes to an end, the 15 Ros Altmann CBE, A New Vision for Older Workers: Retain, Retrain, Recruit 16 March 2017, Mercer, The Emerging UK Workforce Crisis: The UKs Workforce Challenge Is Not Too Many People but Too Few. 12

13 dependency ratios are likely to only increase, causing major fiscal implications with less people in work to care for an aging population. Have you made any assessment of the impact of a possible reduction in the availability of EEA migrants (whether occurring naturally or through policy) as part of your workforce? What impact would a reduction in EEA migration have on your sector/local area/region? How will your business/sector/area/region cope? Would the impacts be different if reductions in migration took place amongst non-eea migrants? Have you made any contingency plans? Reductions in EEA nationals: 42. In the Breaking the Chain, respondents were asked how the supply chain would adapt if their company did not have access to EEA nationals. 55% 50% 36% 17% 13% 7% Look to automate production Seek to recruit locally Business becomes unviable Relocate overseas Diversify operation to suit local skills Relocate in the UK Source: Food and Drink Supply Chain Workforce Survey Notes: Based on 108 responses, respondents were able to tick all options that apply 43. The most prominent finding from this graph is that over a third of respondents said that if they did not have access to EU nationals then their business would become unviable. The collective turnover of these respondents totalled over 3.5bn. 44. A further 17% of respondents stated that they would relocate overseas if they had no access to EU labour. The collective turnover of these respondents was over 3.6bn. Ireland and Northern Ireland border: 45. The future of the Republic of Ireland (ROI) border with Northern Ireland is a particular concern for food and drink manufacturers operating in that region. Concerns were raised regarding the possibility of a hard border and losing workers to the jurisdiction of the ROI to remain in the EU. 13

14 On this issue, one respondent commented that 17 : our border with the Republic of Ireland is 30 miles away. We will lose EU nationals to other employers in that jurisdiction. 46. The closeness and importance of ROI and Northern Ireland for food and drink cannot be understated, 50% of cross-border trade is in agri-food, and it is critical that the workforce for food and drink manufacturers to be able to move swiftly between the border. Recruitment Practices, Training & Skills: Part 2 Please provide evidence on the methods of recruitment used to employ EEA migrants. Do these methods differ from those used to employ UK and non-eea workers? What impact does this have on UK workers? Have these methods changed following the Brexit referendum? Do recruitment practices differ by skill-type and occupation? What are the advantages and disadvantages of employing EEA workers? Have these changed following the Brexit referendum result? 47. For the most part, food and drink manufacturers do not differentiate when recruiting. They see no difference between a UK worker or a non-uk. They recruit from their local market and their priority is being able to recruit someone who is willing and able to work. Table: Methods that employers typically use to recruit permanent and seasonal/temporary workers (% of respondents per recruitment method seasonal versus permanent ) Recruitment method Permanent Seasonal/Temporary Total Respondents per option Online 96% (74) 45% (35) 77 Local/regional 93% (39) 29% (12) 42 press Word of mouth 85% (61) 50% (36) 72 Employment 83% (79) 63% (60) 95 Agencies Jobcentre 75% (27) 44% (16) 36 (universal job match) Labour Providers 46% (28) 87% (53) 61 Source: Food and Drink Supply Chain Workforce Survey Notes: Based on 109 responses, respondents were asked to tick all recruitment methods that apply 17 August 2017, Workforce Strategy Group, Breaking the Chain 14

15 48. Seasonal and temporary labour is often sourced through employment agencies and labour providers. This is likely to be due to the fact that seasonal or temporary work for the food and drink supply chain is likely to be needed at very short notice to deal with short term demands from retailers or hospitality. 49. The geographic spread also acts as a challenge when recruiting as food and drink manufacturers often struggle to find good candidates willing to relocate to where FDM sites are located due to housing prices, access to good schools and employment opportunities for dual-career families. For example, one FDF member reported difficulty filling roles in Scarborough and Hull due to the attractiveness of the location. 50. It is also important to note the current economic and labour-market climate manufacturers have been operating in. The UK has currently seen record levels of employment. From May to July 2017 there were 768,000 job vacancies (highest since records began in 2001) with only 1.5 million (4.4% of economically active population) people classed as unemployed. This shows an incredible lack of people per job vacancy, making the employment market extremely completive and tough for employers. This climate has made the UK an attractive place to work for EEA nationals looking for work and for employers looking to recruit. This seems to be evident in ONS statistics for EU nationals in food and drink manufacturing. In 2010, food and drink manufactures had 17% of their workforce from EEA nationals, then in 2016 this had grown to 30%, according to ONS. 15

16 51. The UK labour market is currently very tight. The food a drink sector has found recruitment difficult in part due to a perception that it is low in pay and low in skills, whilst being heavily reliant on manual labour. This image problem was highlighted in the Breaking the Chain survey. Respondents were asked to identify their barriers to recruitment: Attractiveness of the sector 62% Availability of labour 58% Pay 56% Mobility/transport 42% Flexibility of work 36% Awareness of the sector 34% Source: Food and Drink Supply Chain Workforce Survey Notes: Based on 106 responses, respondents were able to tick all options that apply 52. As the chart above illustrates, two thirds of respondents stated that the attractiveness of the sector is a barrier to recruiting the talent they need. In addition to this when respondents were asked whether they faced challenges when looking to recruiting locally, 70% of respondents stated that they face challenges for permanent positions and 63% for seasonal or temporary positions. Conversely, only 7% of respondents said they did not face any barriers to recruitment locally. Case Study Flavourists In the UK there are certain qualifications and skill training not being, which is evident in a number of vital parts of food production. There are also certain food and drink specific skills qualifications which are only delivered externally to the UK, despite them helping support innovation in the industry, for example food flavourists. Currently there is only one training course in the UK that looks at flavouring. This is a three-week course run by the University of Reading. 16

17 This is in contrast to countries who have much more of a focus and training provisions for flavourists. The US has the largest structured organisation in this area. France has a University in Paris for the fragrance and flavour industry, which developed out of the South of France in the 19 th Century. Germany, as a base for some of the largest global companies has structured courses run by the companies themselves. We do not have any scale Head Office operations in our industry in the UK One company in the UK employs 7 flavourists, at various levels of experience: two experienced flavourists come from the UK, but had to be headhunted from other companies. The mid-level flavourists comes from South Africa. And the company has two trainee flavourists that are British and French. One flavourist from France resigned in May, and they have yet to be able to fill this vacancy. The company representative went on to say In reality the issue is a wider one about Food Science in general. A Food Science degree is a precursor to specialist flavour training. I have as big an issue with analytical chemists, food application technologists and even QC technicians. I am routinely forced to recruit abroad for all Food Science graduate positions. To what extent has EEA and non-eea migration affected the skills and training of the UK workers? How involved are universities and training providers in ensuring that the UK workforce has the skills needed to fill key roles/roles in high demand in your sector? Do you have plans to increase this involvement in the future? 53. The food and drink industry has done a number of things to achieve the pipeline of talent and skills it needs: Food and Drink Manufacturing Apprenticeship Ambition: 54. The industry is committed to using apprenticeships as a way of growing its talent pipeline. Grant Thornton research showed that 34.7% of survey respondents would introduce more apprenticeships to futureproof their workforce. 18 There have been a series of initiatives including FDF s first apprenticeship pledge which saw apprenticeship numbers in FDM quadruple in an 18-month period from 1,710 to 7,535 in England and Scotland by the end of The 2015 pledge builds on this and aims to triple apprenticeships within the food & drink industry by 2020, taking it from 1% to 3% of the workforce. 18 Grant Thornton, FDF Economic contribution and growth opportunities, June 2017, page 35 17

18 55. However, Baseline data showed that less than 1% of the FDM workforce was made up of apprentices. The latest data shows that there were 2,200 apprenticeship starts in the industry in 2016/ The Apprenticeship Levy provides an opportunity to drive change regarding the number of apprenticeships offered. FDF continues to work with government regarding future proposals to increase the flexibility of the levy. This should highlight the work that the food and drink manufacturing sector has undertaken to up-skill the resident population, it will take time to train the necessary skills we need. MEng Food Engineering at Sheffield Hallam University 57. Engineering is one of the most vital specialisms required to increase automation and plant reliability in our industry. However, in 2012 there was no university provision in the UK for food and drink engineering. This meant that new graduates had the qualifications but not the skills and required extensive training on the specific requirements of working in the food industry. 58. To remedy this, FDF and the National Skills Academy for Food and Drink Employer came together with industry to identify a delivery body for the MEng Food Engineering. After a competitive tender process, Sheffield Hallam University was identified as the delivery partner due to its current links with the food industry, engineering expertise, student experience and ability to deliver a centre of excellence. This degree gave food and drink manufacturers an opportunity to take collective action to secure sufficient flow of highly talented engineering graduates into the food and drink manufacturing industry. Industry supported the development of the MEng Food Engineering by: Providing a bursary of 2.5k to new students on the course. Nominating specialist colleagues to participate in the working groups setting up the project, including informing the course curriculum. Working with Sheffield Hallam University to recruit high caliber people Offering a scholarship to a current employee Providing guest lectures Offering paid work placements Agreeing to employ Graduate Excellence graduates (subject to final references and grades) Working with suppliers to donate new or nearly new equipment for the Centre of Excellence in Food Engineering. Hosting factory visits for prospective students and current students, to give them a taster of what it is like to work as an engineer. Providing engineers to support events throughout the year to promote the degree. Challenges experienced: The Food Engineering degree and subsequent pathways were developed for the industry, by the industry, and aim to create a pool of specialist engineers equipped to meet the specific needs of the sector. First entrants on the course began in September However, 18

19 despite the large scale support and investment from industry, including bursaries and a focused recruitment campaign, take up has remained low. 59. Industry has worked with Sheffield Hallam to find solutions. This has included a move towards a generalist first year of learning alongside mechanical engineering and the creation of more food and drink engineering modules that can be incorporated into other engineering degrees. Ultimately, despite the huge investment from companies and their continued support for the students of these course, external barriers still exist which slow the progress of the development of a future pipeline of engineers for the industry. Food and Drink Manufacturing Sector Deal and the Industrial Strategy: 60. Since the introduction of a Modern Industrial Strategy from the Department for Business, Energy and Industrial Strategy (BEIS), FDF has been working with BEIS and our sponsoring government department, Defra, to create a sector deal proposal to focus on three key issues for food and drink manufacturing. These are skills, exports and innovation. 61. Skills provision was identified as a critical issue for a food and drink manufacturing deal. Food and drink has a long standing problem with being able to recruit the skills needed. The decision to leave the EU and signals to ending freedom of movement has added further pressure. Thus, as part of a long-term plan to address the looming skills gap in food and drink manufacturing, the skills stream of a sector deal would propose to focus on: a. Developing an industry STEM pledge, building on the existing FDM apprenticeship ambition and galvanise industry to take action. b. Addressing market failure and building a network of training centres across the UK to enable FDM business to access the sector specific training they need. c. Building leadership to grow productivity: Bringing the right people with the right skills into our businesses and identifying the cultural requirements around leadership are central to continuing productivity improvement. Given the size and scale of the industry, any food and drink productivity improvements will have a significant impact on the UK s manufacturing performance and that of the wider economy. d. Creation of industry LMI will help track the progress of the skills sector deal activity and is key to helping both the government s and industry s understanding of food and drink manufacturing, its skills gap and the success of initiatives designed to bring about a step change. 62. Whilst a sector deal will look to address the skills gap the industry is facing, this is a long-term plan. The sector deal for food and drink manufacturing is still yet to be agreed and signed off by Government will take many years to 19

20 come to fruition on the skills landscape. EU-exit to date is expected to happen by March A sudden withdrawal from freedom of movement will not only move the goalposts of skills but as outlined earlier, have drastic affects for food and drink companies. How well aware are you of current UK migration policies for non-eea migrants? If new immigration policies restrict the numbers of low-skilled migrants who can come to work in the UK, which forms of migration into lowskilled work should be prioritised? Should the current shortage occupation list be extended to low-skilled roles? 63. From the Breaking the Chain survey participants were asked about their experience of using the non-eu migration system. 12% 13% Positive Negative 50% 25% Not used Impartial Source: Food and Drink Supply Chain Workforce Survey Notes: Based on 69 responses 64. As you can see from the non-eu graph, half of respondents have an impartial view of the current system, a quarter have no experience in using the system. And there is an even split of positive and negative views on it. Applying the non-eu system to EU nationals: 65. Furthermore, it should be clear that applying or copying the non-eu system to those from the EU would be problematic for the industry. A report from the Oxford Migration Observatory shows that if the current visa system for non- EU nationals were to be applied to EU nationals already working in the UK, three-quarters would not pass the requirements. The report outlines that is likely to be worse in the cases of food and drink manufacturing and agriculture. 66. This point is reinforced by analysis undertaken by the Institute for Public Policy (IPPR). Their report finds that the occupational profile of EU nationals combined with the stringent income and skills criteria for the Tier 2 system means that the vast majority of EU nationals would not be eligible if these 20

21 rules were introduced 19. The report finds that applying the Tier 2 system will mean that only on current EU nationals in the UK now would be allowed in via that route 20. Future Priorities from a migration system 67. When asking about what the whole food and drink supply chain would like from a replacement migration system, there is clear preference for a timely and simple system. In the Breaking the Chain survey respondents were asked to prioritise their needs from a migration system, with one being the highest priority and six being the lowest. Timely access to workers 65% 27% 7% Short and simple process 63% 30% 7% Ability to access workers at all skill levels 54% 29% 17% Low cost to my organisation 51% 28% 21% Enables us to meet short term or temporary needs 42% 27% 31% Flexibility 39% 48% 13% Source: Food and Drink Supply Chain Workforce Survey Notes: Based on 98 responses, respondents could select all options that apply 68. As can be seen in the chart above, two thirds of respondents see timely access to workers and a short and simple process and the most important factors that need to be taken in consideration when looking to develop a new migration system. 69. This response is further backed up by other sectors within the food chain s separate survey. In a supplementary survey in the Breaking the Chain from the British Retail Consortium (BRC) and the National Farmers Union (NFU) found the two highest priorities for retailers was also a short and simple process and timely access to workers as well. 19 April 2017, IPPR, Striking the Right Deal: UK-EU migration and the Brexit negotiations , Oxford Migration Observatory, Labour Force Survey 21

22 Retail supplementary survey: GRAPH: Looking ahead to the design of a new migration system, food retailers ranked simplicity, speed and flexibility as the top three features Short and simple process Timely access to workers Flexibility Low cost to my organisation Ability to access workers at all skill levels Enables us to meet short term or temporary needs 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100% Agriculture and Horticulture supplementary survey: GRAPH: Looking ahead to the design of a new migration system Rank Mean rank score Having timely and flexible access to workers (206) A simple process (206) Accessing all skill levels (206) Low cost to the employer (203) The results show that farmer and grower respondents to the NFU Access to Labour survey ranked having timely and flexible access to workers as the most important element of a new migration system. Having a simple process was ranked second most important with the ability to access all skill levels a close third (mean scores of 2.14 and 2.27 respectively. 71. The fact that all three surveys, each comprising a significant part of the food and drink supply chain highlight the unified position on priorities for a future system. 22

23 ANNEX 1: FDF forthcoming future workforce survey A draft list of survey questions can be found here: 1. Size of the business (number of FTE or equivalent)? 2. How many full-time equivalent employees currently work for your organisation? 3. What is the rate of churn (employee turnover) at your company? 4. What occupation area do you experience the most churn in? 5. How many vacancies do you anticipate you will need to fill over the next 2 years? 6. What is the average age of your workforce? 7. How many employees in your organisation will retire in the next two years? ANNEX 2: FDF Food and Drink Manufacturing Workforce Survey: December 2016 attached within the . 23