ALMR response to the Migration Advisory Committee s call for evidence on EEA migration and future immigration policy About us and the sector The ALMR is the leading body representing the eating and drinking out sector. Our members own over 90% of all managed pubs, bars, restaurants and nightclubs in the UK. As a whole the sector generates 63 billion in economic activity, employs 1.6 million people and invests 4.4 billion each year. Context It is clear the Government wishes to take greater control of immigration policy following the decision to leave the European Union in the 2016 referendum, and its commitment to reducing net immigration to the tens of thousands. It is critical that this takes into account the interests of sectors that are currently major employers of EEA labour. This is one of the reasons we welcomed the Home Office s decision to commission the Migration Advisory Committee (MAC) for advice on the current picture of EEA immigration and its thoughts on future immigration policy. The UK Government has made bold offers on the future rights of current EU citizens and those that arrive before the UK leaves the EU. We welcome this as the basis of any permanent future settlement. As a major contributor to employment and the broader economy in the UK we hope that the eating and drinking out sectors voice will be granted due significance in this debate, and we are willing to assist the MAC in any way possible to ensure that the sector is valued, and its voice is heard. As set out below our main points are as follows: There are approximately 150,000 EEA workers in the eating and drinking out sector This sector has the second highest number of EEA workers, and the fifth highest proportion Growth in the sector has driven overall employment higher, with UK nationals the main recipients, supplemented by EEA workers The majority of workers in the sector are medium-skilled, with a significant number of lowerskilled roles Recruitment of staff takes place in the UK and does not vary for UK and EEA nationals Operators are investing in their workforce, with the sector currently offering the most comprehensive training it ever has and with intentions to expand this further Wage rates in the sector have grown 50% more than the wider economy, at the same time as immigration has grown Operators believe that restricting EEA migration will lead to increased pressure on existing staff, a slowdown in business growth and increased costs to customers The sector strongly believes that EEA migration has made a positive contribution to the UK economy and society and enhanced individual businesses and the customer experience. Tel: 020 8579 2080 www.almr.org.uk 1
We believe there is a compelling case for the Government to make clear commitments to current EEA residents and develop a future immigration policy that allows the hospitality sector to grow and deliver a great experience for its customers. In terms of current EEA citizens resident in the UK, we support the Government s commitment that all EEA citizens resident for five years at the point that we leave the EU to be able to apply for settled status and for those resident for a shorter period to be able to work towards settled status, with a guaranteed right to remain. The process to secure such rights needs to be as streamlined and straightforward as possible, and the mechanism for employers to ensure that employees are legally permitted to work made as convenient as possible. A future immigration policy that would work for the hospitality sector is desirable for all involved. Our initial thoughts on how this might look are summarised below: A bespoke migration system for non-graduate EU workers, outside of existing arrangements, that offers preferential status to EU citizens, linked to a broader trade deal and focuses on sectors and occupations with staff shortages The Youth Mobility Scheme to be extended both in terms of length of time and in terms of age this could be three years with the option of an extension, or five years, and apply to those up to 35 years old Clarification of the rights of those who move to the UK during any transition period, and set out the future rights of all who move and work post-brexit Reduce the administrative burden on UK companies by placing the onus on the citizen to obtain legal permission to work in the UK without the need for a sponsor employer - and a simple process for employers to recognise the right to work Ability to move to the UK in search of work as part of broader travel arrangements, though with restricted rights to UK benefits Language-based occupations should be added to the list of skills shortages, including those in hospitality. Tel: 020 8579 2080 www.almr.org.uk 2
EEA migration and the hospitality sector When publishing its call for evidence the MAC also set out its analysis of EEA workers in the UK labour market, based on publicly available information. This was a highly-informative document that can inform wider debate about the impact of EEA labour on the UK economy and allows a focus on specific sectors for which overseas labour is more important. It is worth re-capping on some of the data presented in the briefing note for the hospitality sector 1. As shown in Chart 8 of the MAC s briefing paper there are around 150,000 EEA workers in this sector, dramatically increased from under 40,000 in 2004, and the second highest for any sector. Chart 9 of the paper puts this in more perspective, showing EEA nationals as a proportion of the workforce. This shows that around 12% of the sector s employees are from EEA nations, this drops to the fifth-highest sector. This would suggest that the absolute size of the sector s workforce, which has seen significant growth in recent years, is the main driver for employing EEA nationals, rather than a concerted effort to employ overseas labour. 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? The hospitality skills body People 1 st has produced some detailed analysis on the types of roles that migrants typically perform within the sector. This shows that three occupations dominate the overall number of migrant workers across the sector chefs, kitchen and catering staff and waiting staff. Restaurant managers also make up a significant proportion. Table 1: Migrant workers in the hospitality sector (People 1 st ) 1 For the purpose of this response we have defined the sector as in line with SIC code 56 food and beverage service activities Tel: 020 8579 2080 www.almr.org.uk 3
The chart below analyses the data above for the five most prevalent occupations in the sector and compares the trends between UK workers, EU nationals and non-eu nationals. There is a large upward trend in total numbers for 3 of the 5 occupations those related to foodservice. There is a small decline in bar staff and overall managerial numbers. In terms of nationality the five occupations have all seen a growth in EU nationals, as one would expect given the increase in EU-born citizens in the UK. Non-EU nationals have seen a decline in four of the five categories, with chefs being the exception. This is presumably a result of tighter immigration controls on non-eu nationals. Overwhelmingly the largest increase has been in UK-born nationals within the sector, suggesting that recruitment of EU nationals is going hand-in-hand with recruitment from the domestic population. Chart 1: Category of birth for workers in 5 biggest hospitality occupations, change 2011-2016 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0-10,000-20,000-30,000 Restaurant and catering establishment managers Chefs Kitchen and catering assistants Waiting staff Bar staff UK Non-EU EU national These changes are highlighted in the chart below, which also shows the total proportion of staff in each role. There is a diverse mix of nationalities with the majority being UK born but a strong representation of EU and non-eu staff too. The most significant change in the chart below is the growth of EU nationals, largely at the expense of non-eu nationals. The exception to this is with chefs where there has been a noticeable increase in demand for this occupation as the eating out sector thrives, but not enough supply from the domestic market. The chef shortage is a well-known and one that needs to be addressed through the education and training system, as well as through a managed immigration policy. These five occupations alone have created an extra 145,000 roles in five years. The biggest increase has been amongst the domestic population, followed by EEA nationals, with a decline in non-eea nationals. Tel: 020 8579 2080 www.almr.org.uk 4
Chart 2: Change in mix of occupations, 2011 to 2016 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2011 Restaurant and catering establishment managers 2016 Restaurant and catering establishment managers Chefs 2011 Chefs 2016 Kitchen and catering assistants 2011 Kitchen and catering assistants 2016 Waiting staff 2011 Waiting staff 2016 Bar staff 2011 Bar staff 2016 UK EU nationals Non-EU Occupations within the sector require a broad mix of skills, at various levels. Of the top five occupations above kitchen and catering staff, waiting staff and bar staff can all be seen as entry-level positions with relatively low-skill levels; all of them have the potential to become NQF3 positions and therefore become classed as medium-skilled. Chefs and restaurant managers will sit either in medium or high-skilled depending on the level of qualification level needed. Chart 10 of the MAC briefing note gives a useful breakdown of the skill levels within the sector, with the majority of EEA nationals in the sector being classed as medium-skilled. Our own view is that the chart underestimates how many EEA migrants are in high-skilled roles. The chart clearly demonstrates that an immigration policy that focuses solely on high-skilled roles will leave major gaps in the UK labour market, especially in the short- to medium-term. Policy therefore needs to address lower- and medium-skilled roles. 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? The hospitality sector is seasonal to some degree with large peaks in trading seen across the summer and at Christmas. This supplements the year-round trade that eating and drinking out provides to its local communities. There is therefore a seasonal demand for EEA migrants, though this is partially offset by university students returning home for the holidays. These roles tend to be at entry-level but can extend to medium-skilled occupations such as chefs. There will also be a relatively high level of part-time employment amongst EEA nationals. Many will be working part-time to support themselves through education. Others will be supplementing their savings while travelling. This reflects the varied nature of employment within the sector. Our survey suggests that there is a 50/50 split between those that predominantly employ EEA migrants parttime and full-time. Tel: 020 8579 2080 www.almr.org.uk 5
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? The ALMR will be carrying out its annual employment survey early in 2018 and this will provide relevant information on migration patterns over the last 12 months in this sector. 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? There is limited data available going back to 2000 on trends in employment of EEA migrants. Charts 8 and 9 of the briefing note show the changes at a sector wide level, with a significant increase in workers in food and beverage serving activities between 2004 and 2016. There is a doubling of the proportion of EEA national workings in the sector in this period to around 12%. Since the referendum there is also limited data available, but we have had some very clear anecdotal evidence that there are fewer staff available, and again these are hitting the critical areas in which there are staff shortages, such as chefs and kitchen assistants. This seems to have been caused by a number of factors, not solely the referendum. The depreciation of sterling, linked in part to the referendum, has made working in the UK and sending remittances back to one s family in another country less worthwhile. Other EEA nations are also seeing their economies improve following the extended downturn linked to the Eurozone area. Trends in the sector look broadly similar to the experience of UK nationals over the last decade or so, though at a higher growth rate for EEA nationals. Non-EEA workers have faced a different immigration policy and this has led to divergent patterns of migration, broadly declines in workers in most occupations. Have you conducted any analysis on the future trends of EEA migration, in particular in the absence of immigration controls? The ALMR has not carried out any detailed analysis of EEA migration in the event of no immigration controls as this seems unlikely. Our overall view was that the rate of EEA migration had already begun to slow prior to the referendum (notwithstanding a spike when Romanian and Bulgarian citizens were permitted full freedom of movement). The factors discussed above suggests that rates of migration would have slowed further in the coming months and years, and this remains our view regardless of any additional immigration restrictions being put in place. There is of course the potential for another spike in immigration dependent on the final agreement of the terms of the UK s exit from the EU on EU citizens rights. Tel: 020 8579 2080 www.almr.org.uk 6
% of respondents 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? The sector is already concerned that there has been a decline in the availability of EEA migrants in certain areas that are causing acute labour shortages as there is not the domestic population willing and able to carry out these roles at present. This is a challenge for the wider economy and the sector that will need to be dealt with in a coordinated fashion, including improved education and training and an improvement in the image of the sector, which is covered in the next section. In our survey with People1st 44% of employers said they were very dependent on EEA migrants, with 56% saying they were quite dependent on them. No business expressed a view that they were not dependent on these workers, again highlighting the importance to the sector of a sensible policy on immigration. Employers are beginning to make contingency plans, though these should probably be seen as much as an extension of work that had already begun. This includes improving productivity, through staff training and investment in technology. Wider plans to improve the reputation of the sector as a great place to work have been underway for some time and links to Government policy to support hard-to-reach groups and integrate them into the workforce are in place. These factors will all support the sector to cope to some degree but it is important that these measures are supported by a pragmatic immigration policy. The impact of restrictions in EEA migrants was highlighted in the survey. When asked what impact restrictions on EEA migration would be likely to have nearly all respondents suggested this would add pressure on existing staff and the vast majority anticipated that this would result in higher costs to the consumer and a slow-down in business growth. Chart 3: Anticipated impacts of restrictions on EEA migration 100 90 80 70 60 50 40 30 20 10 0 94 88 71 41 29 24 18 12 Tel: 020 8579 2080 www.almr.org.uk 7
% of respondents Recruitment, training and skills As a leading service sector business recruitment, training and skills are crucial to all employers. As we have demonstrated recruitment is predominantly carried out in the UK and there is no discrimination on the grounds of nationality. The sector is undertaking the most comprehensive amount of training that it ever has, investing tens of millions developing its workforce. This is at entry-level through to ongoing career development to managerial level and above. 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? Recruitment methods have been discussed with the majority of the large ALMR members and the consensus is that there is no difference at all in how EEA migrants are recruited compared to the domestic population (or indeed non-eea workers). Whilst recruitment methods do vary these will be UK-based and targeted at current residents. The most common forms of recruitment practice will be through JobCentrePlus, job boards, job fairs, direct advertising through websites and social media channels and word of mouth. The only significant change following the referendum is that recruitment has become more difficult and more money is being spent on it. Chart 4: Recruitment tactics 100 90 80 70 60 50 40 30 20 10 0 92 69 62 54 39 39 8 In our survey with People1st, 88% of respondents told us that staff recruitment had become more difficult over the last 12 months, with three-quarters of these telling us that this was due to a lack of suitable candidates. Three-quarters stated that staff turnover was the main driver behind their need to recruit, whilst 70% said that it was driven by growth plans. Tel: 020 8579 2080 www.almr.org.uk 8
% of respondents Unsurprisingly, chefs were the main area where labour shortages were occurring, with every respondent claiming that this role was hard to fill. Managers, kitchen porters and waiting staff were also highlighted. Chefs, kitchen porters and bar staff tended to have the highest turnover. Chart 5: Hard to fill and high turnover occupations 100 90 80 70 60 50 40 30 20 10 0 Hard-to-fill High turnover Do recruitment practices differ by skill-type and occupation? Recruitment tactics do vary depending on the position that is being recruited for, as would be expected. Entry-level staff can be more readily accessed through job fairs and through JobCentrePlus. More specialist staff, such as chefs, tend to be more difficult to recruit and this is where social media can be more effective. Incentive schemes for current staff can also prove successful. What are the advantages and disadvantages of employing EEA workers? Have these changed following the Brexit referendum result? The feedback we have had from our members is that there is very little difference between UK nationals and EEA nationals provided that they are both keen to work and have the appropriate level of skills for the job. It is very hard to describe the characteristics of an entire population of people. However, in general, EEA migrants are younger and are therefore more likely to be looking for work in the hospitality sector where around half of the employees are under the age of 25. The flexibility in the sector and sociable nature of the work also proves attractive to many EEA workers. To what extent has EEA and non-eea migration affected the skills and training of the UK workers? In our view it has had a very limited impact on skills and training provided to UK workers. Across this sector the quantity and quality of training has never been better. Operators understand the need to have competent staff who can provide the level of service that customers want, and are intent on delivering it. Even with high levels of EEA migration in recent years there has still been a shortage of staff as the sector has grown significantly. The battle to retain staff is intense and training is a vital component of this. Tel: 020 8579 2080 www.almr.org.uk 9
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? The roles of universities and training providers varies across the country. Members have certainly had very good experiences with both types of educator, but others have had less favourable interactions. As part of our broader work on promoting the sector and raising standards we are looking to work more closely with schools, colleges, universities and training providers to ensure that domestic and overseas workers have the right skills for the workplace and to promote continuous learning. 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 low-skilled work should be prioritised? For example, the current shortage occupation list applies to high skilled occupations; do you think this should be expanded to cover lower skill levels? The ALMR has a detailed understanding of the non-eea migrant policy framework and a number of businesses within the sector have recruited staff through the Tier 2 scheme, principally for chefs and managers. We understand that there is a desire to reduce net immigration and that any future immigration policy will include this intention, but it is also imperative that this does not harm the economy and the eating and drinking out sector is central to this. There should be basic principles behind any move to restrict low-skilled immigration. Fundamentally, it should not damage the economy, it should allow staff shortages to be met and it should not unduly burden business with additional costs. There is widespread support for temporary visas for young people and an extension of the Youth Mobility Scheme would support this. Our proposal would be that those aged 35 and under would be entitled to live and work in the UK for at least three years on such a visa/permit. They would not be entitled to the full range of welfare benefits available to UK residents and those with settled status. At the end of their visa they would be entitled to an extension for a further three years, provided they had secure employment and had contributed financially during their initial three-year period. This would essentially ensure that young people would be entitled to work in the UK from across Europe, provided they had employment or were self-sufficient, and would help to contribute to the UK s workforce needs, particularly in this sector. In addition to this we believe there would need to be a wider immigration policy that permitted people of all ages to come to the UK to search for work, where it is needed. This could allow a timelimited visa to allow the individual to find employment in areas where there are shortages. This could be controlled through a list of occupations or sectors that was held centrally and updated regularly to reflect employer needs. This would need an extension of the current occupation list and perhaps a review of whether occupation or sector is more appropriate. The eating and drinking out sector should be a priority for low-skilled immigration as it has relatively rapid turnover of staff (though measures are being implemented to deal with this) and there are a large number of positions available. It is also a sector that impacts upon the lives of so many people Tel: 020 8579 2080 www.almr.org.uk 10
/hour and any reduction in the number of businesses, through a lack of available staff in the sector, will add to the overall cost of living in the UK and damage the UK s reputation as a tourism destination. Economic, social and fiscal impacts The eating and drinking out sector hugely values the economic social and fiscal benefits that have been brought by EEA migrants. We believe that EEA migrants have contributed significantly to the growth in the sector, particularly since the financial crisis of the late 2000s. There has been a dramatic increase in business activity supported by huge growth in employment, for both UK and EEA nationals, as demonstrated above. EEA migrants have delivered major social impacts in addition to the UK. Supporting the eating and drinking out sector to grow and providing great customer service in its outlets has boosted the social lives of the tens of millions of people who eat and drink out each week. They have brought significant cultural diversity, contributed to the introduction of a more varied food and drink offering and brought new ideas in terms of customer service and management. Those EEA migrants in employment within the sector will also be contributing to the Exchequer. Facilitating business growth in our sector will be growing tax receipts as will the employment taxes they pay and their spending in the domestic economy has helped the wider economy grow. In terms of wage levels there is little evidence to suggest that EEA migration has hampered growth in this sector. The chart below shows wage levels in the sector compared to the broader economy. Growth has been consistent since 2008 (when comparable data is first published). In this period earnings in the sector by 27%, compared to 18% for the economy as a whole. The latest ONS earning data suggests that the mean weekly earnings in the sector grew by 7.2% in 2017, nearly three times higher than overall wage rates. Chart 6: Wage rates in the hospitality sector and the wider economy 16 14 12 10 8 6 4 2 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p Accommodation and food service activities All industries and services A future immigration system that ensures that EEA migrants can contribute to the UK workforce, alongside domestic staff, will ensure that these benefits continue to accrue. Tel: 020 8579 2080 www.almr.org.uk 11
Do these differ from the impact of non-eea migrants? We do not have any data that would show the difference between EEA and non-eea migration and we do not believe there is a significant difference. Do these impacts differ at national, regional or local level? The contribution of EEA migration will vary according to different areas and the local economy. On the whole EEA migrants have concentrated in urban areas where they have played a major part in the boom in hospitality. They have also provided valuable support in areas that have a need for seasonal employment, such as the South West of England during the summer. Do these impacts vary by sector and occupation? Our experience is that EEA migrants have gravitated to occupations where there are existing shortages of domestic staff, including in the eating and drinking out sector. This is reflected in the particularly large growth in chefs and kitchen assistants in our sector. Do these impacts vary by skill level (high-skilled, medium-skilled, and low-skilled workers)? Overall, the evidence from our sector suggests that EEA migrants have tended to take low- and medium-skilled roles. This is linked to the point above about the type of role where there is a shortage of supply of domestic candidates at present. This is why an immigration policy needs to reflect the actual demands of the UK economy and employers, and this must encompass immigration rights for low- and medium-skilled workers. Future immigration policy The points above show the importance of EEA workers currently working in the sector and the anticipated need for EEA nationals into the future, to supplement the vast UK workforce that we employ. Businesses are committed to developing the skills and careers of all those entering into their operations, and are eager to work with Government to ensure that the education system allows a smooth transition from schools and colleges into work in hospitality and catering. Policy is clearly evolving in this area, but we believe there are key priorities that Government should deliver on the following for existing staff, in line with what it has already outlined: - Prioritise enshrining the rights of current EU citizens resident in the UK - The date for which EU citizens are considered to be resident for the purpose of working towards settled status should be the point at which the UK exits the EU, not before - Any worker legally in the UK on the date of departure to be able to remain to work towards settled status i.e. settled status at 5 years - Automatic transition to settled status for those already with residency - Settled status to be a notification process, online and swift with an employer able to rely on the evidence of residency or previous work pending that processing. Following the UK s exit from the EU we believe there needs to be a pragmatic approach to meeting the workforce needs of the eating and drinking out sector, that aligns with broader Government policy. We propose: Tel: 020 8579 2080 www.almr.org.uk 12
- A bespoke migration system for non-graduate EU workers, outside of existing arrangements, that offers preferential status to EU citizens, linked to a broader trade deal and focuses on sectors and occupations with staff shortages - That the Youth Mobility Scheme is extended both in terms of length of time and in terms of age this could be three years with the option of an extension, or five years, and apply to those up to 35 years old - Clarification of the rights of those who move to the UK during any transition period, and set out the future rights of all who move and work post-brexit - To place the onus on the citizen to obtain legal permission to work in the UK without the need for a sponsor employer and a simple process for employers to recognise the right to work - The ability to move to the UK in search of work as part of broader travel arrangements, though with restricted rights to UK benefits - That language-based occupations should be added to the list of skills shortages, including those in hospitality. Tel: 020 8579 2080 www.almr.org.uk 13