Brexit Danger for the Hospitality Sector
October 13, 2016
Evidence seems to suggest that the summer season has been very busy throughout the region and there is anecdotal evidence that terrorism concerns overseas and the weak pound have contributed to this success. The Brexit vote however, sends out a warning signal to all which rely heavily on overseas labour and hospitality is one of the sectors that may be most affected if movement of labour is controlled.
The UK hospitality trade has an estimated turnover of £90bn, is worth £46bn to the economy in terms of profit and wages and employs an estimated 2.44m people directly and a further 675k in the supply chain. This represents around 8% of total employment in the UK making the sector the 5th largest employer nationally.
Since 2009 the number of migrants that are employed in the UK hospitality trade has increased by 29% and UK nationals now only account for 76% of the overall workforce. It is anticipated that the growing demand for employment in the sector will continue to be mainly met from overseas, further increasing reliance on non UK nationals.
As we head towards the negotiations for Brexit the industry faces huge problems if controls are placed on the freedom of movement of labour, as employers would find it challenging to recruit for posts at all levels in their organisation. It would appear that the only way this issue could be addressed would be to increase pay rates to make the jobs more appealing to the UK nationals, which would inevitably lead to increased prices for consumers or lower margins for operators.
Colin Johnson is an expert in advising businesses within the Leisure and Tourism Sector on accountancy and financial matters. Contact on Colin on 01539 729727.