Hotels and bars paying staff 18% more in a bid to plug vacancies

Desperate hotels and bars are paying staff 18% more in a bid to plug vacancies with 80% of venues short of workers amid fears furlough is making shortages worse

  • Hospitality salaries have gone from average of £22,701 in 2020 to £26,888 now 
  • Salaries in retail have rocketed ten per cent, from £26,758 to £29,310
  • Restaurant Le Gavroche stopped lunch menu yesterday because of lack of staff 
  • Hotel firm boss Andrew Stembridge said furlough scheme is distorting labour market  

Desperate hotels and bars are giving staff an 18 per cent pay rise in a bid to plug vacancies amid fears that the continuation of the furlough scheme is adding to labour shortages. 

Salaries in hospitality and catering have gone from an average of £22,701 last year to £26,888 now, the Sunday Times reported. 

Referencing figures from recruitment firm Reed, they added that salaries in retail have rocketed ten per cent, from £26,758 to £29,310. 

Chef Michel Roux Jr’s exclusive Mayfair restaurant Le Gavroche stopped its £76 lunch menu yesterday because of staff shortages, meaning it will only open for dinner.  

Overall, there are around 188,000 vacancies in hospitality, with 80 per cent of venues short of staff, according to industry body UK hospitality. 

Other research, by workplace specialist Fourth, showed that one in three large retailers were struggling to fill roles in April.

Andrew Stembridge, director of Iconic Luxury Hotels, whose portfolio includes stately home Cliveden House, said that Chancellor Rishi Sunak’s furlough scheme was now distorting the labour market. 

Desperate hotels and bars are giving staff an 18 per cent pay rise in a bid to plug vacancies amid fears that the continuation of the furlough scheme is adding to labour shortages. Pictured: Chef Michel Roux Jr’s exclusive Mayfair restaurant Le Gavroche stopped its £76 lunch menu yesterday because of staff shortages, meaning it will only open for dinner

Andrew Stembridge, director of Iconic Luxury Hotels, whose portfolio includes stately home Cliveden House (pictured), said that Chancellor Rishi Sunak’s furlough scheme was now distorting the labour market

Whilst acknowledging that the scheme had kept many businesses afloat during the coronavirus pandemic, he told the Sunday Times that its continuation until September was a ‘problem’ for the industry.

‘There are people out there who are potentially still in London who could be in the employment market,’ he added, whilst revealing he had increased entry-level salaries by between five per cent and nine per cent. 

Hotels and restaurants have also been hit by thousands of staff from EU countries not returning to their jobs since they went home in the pandemic and the UK left the bloc.

The Goring hotel, where the Duchess of Cambridge stayed the night before her wedding, currently has 50 vacancies.

And Emma McClarkin, the chief executive of the British Beer & Pub Association, added that some pubs are having to reduce capacity or close entirely because they ‘don’t have enough staff to open’.       

The mismatch between furloughed staff and vacancies, shown above, has led to calls for the scheme to be closed early. The figures above are taken from the latest available from the Office for National Statistics data sets

The Goring hotel, where the Duchess of Cambridge stayed the night before her wedding, currently has 50 vacancies

It comes after separate Office for National Statistics data showed 21 per cent of workers in accommodation and food services were off on at least 80 per cent pay between May 17 to 31, despite the full reopening at the start of that period.   

And the most recent official data for job vacancies, for the three months to April this year, showed there were 45,000 on offer in the same industry, which was up 100 per cent on the previous quarter but down 18 per cent year-on-year. 

Unofficial estimates claim there are now 188,000 openings in hospitality, but this is unverified.

The ONS data suggested there were 657,000 job vacancies across all industries – but furlough rates remain high, with bosses saying some staff would rather stay at home while earning most of their full salary than get a new job.

This Office for National Statistics graphic shows the workforce still on furlough leave in late May in the arts, entertainment and recreation industry (26%), the other service activities industry (26%) and accommodation and food service industry (21%)

In the arts and entertainment industry, there were 26 per cent of workers on furlough and 8,000 vacancies, while in ‘other service industries’ – such as personal services and repairs – the figures were 26 per cent and 11,000.

Britain’s transport and storage industry had 12 per cent of staff on furlough and 23,000 vacancies; while in administration and support services it was 12 per cent and 46,000; and in education it was 6 per cent and 43,000.

The mismatch between furloughed staff and vacancies has led to calls for the scheme to be brought to a close early, before it is set to end this September – with one pub chain boss saying furlough had now ‘done its job’.

Latest ONS estimates suggest 2.1million people are still on furlough – albeit down from 3.4million in late April – and the high vacancy levels suggest people are staying on it instead of applying for other jobs in the same industry.

Dermot King, the boss of Oakman Group which operates 35 pubs and employs 1,200 people, said: ‘I think furlough has done its job. 

‘There is certainly a case to be made that it’s stopping people coming back to work, particularly European employees who aren’t coming back to the UK.’

And Kevin Georgel, chief executive of the St Austell brewery in Cornwall which has 180 pubs, told BBC Radio 4’s Today programme: ‘I think from a hospitality industry perspective we’d have to say that furlough overall has been tremendous in terms of enabling us to look after the vast majority of our people. 

‘But I think there is a risk now that the furlough scheme is slightly distorting the labour market, and our challenge is how do we find a way through that if we’ve got people that are on furlough doing second jobs, or are sat on furlough when actually their job doesn’t exist? So there is a challenge about how furlough plays out over the coming months now that we have a national labour shortage.’


Dermot King (left), the boss of Oakman Group which operates 35 pubs and employs 1,200 people, said: ‘I think furlough has done its job.’ And Kevin Georgel (right), chief executive of the St Austell brewery in Cornwall, said: ‘I think there is a risk now that the furlough scheme is slightly distorting the labour market’ 

However, hospitality industry groups such as UK Hospitality have insisted that the scheme must remain in place until restrictions are lifted, and demand returns to pre-pandemic levels, to avoid a tsunami of job losses.

Meanwhile the Bank of England’s top economist said that wages must rise to encourage Britons to get ‘out of their front rooms’ and back into work to help support the UK’s recovery which he described as going ‘gangbusters’

Andy Haldane insisted businesses on pause need to reopen and furloughed or unemployed workers must get back to jobs to keep up the momentum. 

He told LBC radio that spending in the economy needs to be boosted to support employment, but that better-paid jobs also need to be created to get people off furlough support.

Mr Haldane, who is leaving the Bank at the end of this month, said: ‘It might require a few pay rises… that should encourage people out of their front rooms and off their sofas and back into the world of work.’ 

He added it was about ‘creating the jobs and creating enough well-paid jobs to encourage people back to work’.

He warned that as UK growth recovers at a ‘rate of knots’, there is the risk that inflation – already at 1.5 per cent, and set to go above the Bank’s 2 per cent target – may rocket. 

He said the UK was already seeing some ‘pretty punchy pressure on prices’, with wages starting to rise and increased costs of petrol, diesel, timber and cement.

He added that ‘inflation on the high street isn’t far behind’ and that the Bank may look to trim its vast quantitative easing (QE) money printing programme to keep price rises under control. 

‘We could start tightening the tap on that, slowing down the amount of money we’re printing and ultimately perhaps even to turn that around,’ he said.

Mr Haldane’s comments come as shops, hauliers and hospitality firms in Britain continue to struggle to get hold of qualified staff. Some 26 per cent of people in the arts, entertainment and recreation sector were still furloughed between May 17 and 31, which was a drop from 34 per cent between May 3 to 16 after restrictions were eased.

Separate Office for National Statistics data showed 55 per cent of hospitality staff were on furlough at the start of last month

But the accommodation and food service industry was the biggest bounceback sector in that period, after its proportion of furloughed workers fell from 31 per cent between May 3 to 16, to 21 per cent from May 17 to 31. 

The proportion of furloughed workers in ‘other service industries’ – such as the repair of computers and personal services – was at 26 per cent, and the transportation and storage industry at 12 per cent, according to the ONS.

Following behind those were the administration and support service sector at 12 per cent and education at 6 per cent, before wholesale, retail trade and vehicle repair services also at 6 per cent, and manufacturing at 5 per cent. 

In contrast, the least furloughed industries were health and social work, where it was 0 per cent, followed by 2 per cent in a trio of construction; the scientific and technical sector; and water supply and sewerage management.

Separate ONS data revealed that more half of pub and bar workers were still on furlough at the start of May – despite a third of bars warning they did not have enough staff to cope with the easing of lockdown.

Yesterday, hospitality chiefs demanded ‘certainty’ from the Government and said further support is urgently needed if it chooses to push back plans to ease pandemic restrictions further on June 21.

The Prime Minister is due to announce on Monday June 14 whether or not the fourth stage of the Government’s road map out of lockdown will continue as planned.

Jonathan Neame, chief executive of pub owner Shepherd Neame, has said the Government must confirm a firm date for the axing of all restrictions if there is any delay and avoid recurrent reviews.

He said: ‘The key thing right now is certainty. If there has to be a delay then it should be short and time specific because we need to be absolutely certain that things will change from that date.

‘What we absolutely can’t have is a return to a cycle of five-week reviews without knowing how things will end up.’

The company runs more than 300 pubs in London and the South East and said the end to social distancing must not be cast aside.

Mr Neame added: ‘The basis has always been the justification that we need to reduce hospitalisations and decrease the burden on the NHS.

‘We’ve seen the strength of the vaccine rollout so it appears we have been doing what’s needed to achieve this so lets not move the goalposts now.

‘The end will also have to see the full end of social distancing. It’s one thing if you are looking at a country pub with a large garden but it is essential to remove distancing to make so many bars and pubs viable.’

Andy Haldane, Bank of England chief economist, said the UK’s recovery was going ‘gangbusters’, but that businesses on pause need to reopen and furloughed or unemployed workers need to get back to jobs to keep up the momentum

The latest industry figures revealed that pubs, bars and restaurants reported a 26 per cent sales plunge in May despite the easing of restrictions, with bar firms the heaviest hit.

Kate Nicholls, chief executive of UK Hospitality, also highlighted that thousands of operators will continue to lose money until the last phase of the road map out of lockdown restrictions.

She said: ‘Hospitality businesses cannot continue to operate under conditions that leave them unable to trade profitably and so we echo the importance of Government support should there be any delay to the complete lifting of restrictions on July 21.’

Ms Nicholls added there will need to be a rethink regarding financial support which is due to vanish or change from the end of June.

Currently, the moratorium on rent payments is due to expire at the end of the month with the business rates holiday for retail, leisure and hospitality firms due to change from full relief at the end of this month to a discount limited at £2 million.

‘Among other measures, the Government must postpone business rates payments until at least October and extend the rent moratorium while a long-term solution is found,’ the trade body boss said.

‘Businesses need a swift, publicly-stated commitment that such support will be in place in the event of any delays, giving them much-needed reassurance after more than 15 months of closure and severely disrupted trading.

‘Hospitality is desperate to get back to what it does best and can play a key role in the economic recovery of the UK – but only if it is given the proper support.’

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