Addressing the labour squeeze in the hospitality sector

Faced with severe staff shortages, businesses across the UK are having to find creative solutions to continue servicing clients in a safe and professional way. While the issue has been exacerbated by Brexit, the same trend is occurring across many other jurisdictions as economies reopen following the pandemic.

The number of job vacancies in the UK between January to March 2022 rose to a new record of 1,288,000; an increase of 492,400 from the pre-coronavirus (COVID-19) pandemic level in January to March 2020, according to the Office for National Statistics (opens a new window).

The hospitality sector (accommodation & food services activities) is among the hardest hit sectors in the economy. The number of vacancies in the UK increased by 492% (opens a new window) (136,000) YOY in the first three months of 2022.

While the phenomenon may not have been caused by the pandemic, it was definitely exacerbated by it, with businesses forced to reduce their services or temporarily shut down operations. As economies reopen, the job market cannot keep pace with the sudden jump in demand, particularly given that many workers may have found alternative occupations.

In order for businesses to tackle this challenging environment and adequately protect their operations, it is vital to have a robust risk strategy and insurance solution in place.

Staff shortages can bring new risks for businesses. Employees may be taking on additional roles and responsibilities they are not fully trained in, which can increase the risk of incidents and injuries. Further, insufficient staffing may result in acts of violence and aggression from some service users. Increased workloads can lead to mistakes, corners being cut and fatigue causing inattention, potentially resulting in workplace stress and higher absenteeism, further exacerbating the problems. Companies should therefore tread carefully when addressing staff shortages and the issues of where to prioritise human resources.

Filling vacancies

Currently, recruitment agencies in the UK are generally very busy and hard to get hold of. Instead of working with one agency – as was previously common practice – companies are now having to deal with several firms (though this does not always solve the problem). Agency employees are now able to pick and choose accounts based on pay, job interest, hours and other conditions. This can mean businesses are more likely to take on staff with insufficient training – causing further risks.

When working with agencies, companies should take a few precautions to address the risks associated with unskilled workers, including setting expectations with agency contracts and documenting minimum skillset requirements contractually. Where a full induction cannot be given, companies should limit responsibilities to low risk tasks and ensure ongoing supervision of new starters until they are deemed fully competent.

Location matters, too. In a region heavy on agriculture, staff may be available in the cold season but become scarce in the summer months when field work peaks. Similarly, if a large logistics company operates in the area, it may pull people away from less attractive roles, particularly if it offers bonuses or other benefits.

Hiring permanent staff is also a challenge right now, but where successful, this improves labour supply reliability and reduces reliance on fluctuating agency staff. Being an employer of choice is more important than ever, particularly if you can make your brand/sector look appealing to the younger generation. An attractive employee benefits package, particularly in the areas of mental health and wellbeing, can help draw applicants and retain staff. Measures to reduce staff turnover also include flexible working and an increase in annual leave or salaries for critical roles. Some companies are offering sign-on bonuses, enhanced incentives, as well as loyalty bonuses.

Supervisors need to play a key role in regularly checking that new starters are comfortable in their new roles and know who to contact in case of questions or concerns. Training and supervision is absolutely essential during this challenging time. Where possible, a blended approach should be adopted. There are a number of low cost e-learning platforms where new starters can be sent links to courses to be completed prior to day one (treated as paid time).

On their first day in the job, the emphasis should be on their immediate working environment, covering essentials such as fire safety, security, first aid, accident reporting etc. In a food and drinks environment, allergen awareness is also key. Beyond day one, employers should stagger training to make sure the volume remains realistic to both operational and personal demands.

A ‘buddy system’ is a good way of spreading the challenge of inexperienced staff, particularly in larger teams. It ensures that more experienced employees can lead and bring new starters along as they get used to their new environment and role expectations.


Employers are spending considerable amounts of time dealing with the skills shortages through recruitment activities, such as ‘earn while you learn’ apprenticeships. The ‘apprenticeship levy’ introduced by the UK government may serve as an incentive.

Businesses should also consider the option of re-skilling existing staff. This can, in some cases, represent a better and more sustainable approach. Exploring staff training and development opportunities can create a more agile, loyal, motivated and productive workforce that is more likely to drive the organisation forward.

When reskilling staff, companies should make sure that they are not overlooking the older generation. Extending the working life of older staff members through part-time or flexible working and mentoring is a great opportunity to make their expertise available to all staff for longer – albeit care should be taken when considering older workers in physical roles.

Where existing staff is deployed across a number of new departments to help out, it is important to make sure that obvious skill gaps are addressed prior to them starting each new role. Thereafter, a bespoke programme of ongoing training and supervision should be agreed on with the member of staff.

Fostering flexibility can also help to plug some gaps. Companies may want to consider restructuring shift patterns, for example by introducing a shift that would suit those with children at school. Further, multiskilling employees enables them to work in different areas; building greater resilience for the company in the wake of an absence, while boosting interest in the role. Anything that makes a role more attractive and opens it to a wider pool of people may help.

Reassessing processes

Automation is another avenue worth considering, particularly if staff shortages are set to continue in the medium or perhaps even long term. Robots are usually expensive, large, and heavy, and require complex programming. An alternative could be collaborative bots or “cobots”. These are capable of learning multiple tasks to assist a human being. Cobots are not intended to augment the human worker's capabilities or take their place. Instead, they may take the form of an arm, providing a worker with an extra set of hands.

Due to disruption caused by Covid-19, employers are having to re-evaluate their workforce requirements more frequently. However, an emphasis on short-term solutions can create issues, too. During the pandemic, the deflection of resources towards being Covid-19 secure and compliant has led to other previously prioritised significant risks being overlooked and robust compliance/safety activities being missed from a risk management and health and safety perspective.

There have been cases where risk professionals were put on furlough at a crucial time, when the insurance market was hardening, and insurers were placing greater focus the quality of the risks they were underwriting. An exclusively short-term focus on operations can cause accidents and incidents which can lead to enforcement action and fines, civil claims, and rising insurance premiums, notwithstanding reputational damage that could threaten the prosperity and survival of a business.

When resources are unavailable, it is key to work closely with customers to ensure their top priorities are being met. They can then look to streamline their product offering, without losing anything vital. This can help boost the efficiency of the supply chain with fewer line changeovers and a more streamlined set of raw materials, packaging and sizes, freeing up labour capacity.

With decades of experience behind us, Lockton’s industry-leading risk experts help our clients handle complex exposures such as these. We work with businesses around the world to manage and mitigate the unique risks facing them, protecting both their assets and their people. We do anticipate additional questions from insurers at renewal in relation to potential consequences of staff shortages. These may focus on site security (fewer workers on site), safety regulations, staff training, mental health support, to mention just a few. Where automation has replaced manual work, this should be mentioned to insurers as it might affect the risk exposure.

For further information on how we can help you, please contact your Lockton representative or:

Andrew Nicholson

Partner, Head of Hospitality Practice

Lockton Companies LLP

T : +44 (0)207 933 2336

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