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Mills Selig


How will Brexit Affect the Hospitality Industry?

Like many other industries in the UK, the hospitality industry is collectively looking over their shoulder as the uncertainty that Brexit will have on their ability to operate, competitively or at all, intensifies. Depending on what statistics you rely on, anywhere from 15% - 25% of the hospitality workforce are EU nationals. Add in an already understaffed industry, which is struggling to recruit sufficient numbers to plug the gaps, and you have a potential recipe for disaster.

This is an industry which has already becoming increasingly expensive to operate within as the levels of pay for the National Minimum Wage and for the National Living Wage (for those aged 25 or over) rise year on year. The combination of a shortage of staff, which is likely to only get worse on Brexit, plus the rising labour costs, means many hospitality businesses may be forced out of the market altogether. Indeed, the very uncertainty which Brexit has caused has already triggered the departure from the UK of EU nationals who are concerned about their long-term status.

The draft Brexit agreement which the government announced it had reached on 13 November 2018, has not removed this uncertainty. According to the draft agreement, EU nationals living in the UK for five years or more will retain their right to live and work in the UK. In addition, freedom of movement will be replaced by a skills-based immigration system. However, the status of EU nationals living in the UK for less than five years is not so certain. Furthermore, whilst the Prime Minister has publicly championed the new skills-based immigration system, it does not solve the conundrum that a large proportion of the work in the hospitality industry (amongst others) is low-skilled work, and a significant proportion of workers in those low-skilled jobs currently derive from EU countries.

In a bid to combat the workforce deficit that Brexit will inevitably trigger, the Government is introducing a new technical qualification for 16-19 year-olds instead of A Levels called T Levels, with courses starting from September 2020. Hospitality is one of the industries that students will be able to undertake a T Level in.

With the annual deficit in the hospitality industry anywhere up to 260,000 jobs per year, the introduction of the T Level alone will not solve the problem. However, according to Simon Deakin, Director of the Centre for Business Research at Cambridge University, the situation is not entirely doom and gloom. He predicts that if we Brexit, the government will likely make bespoke arrangements to allow firms in industries which are particularly vulnerable to the loss of EU workers, such as the hospitality industry, to employ foreign migrants.

Of course, much will depend on what type of Brexit deal, if any, the government reaches. Until that point, the position for most industries, the hospitality industry included, will remain uncertain.

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