BRIEFING: Labour crisis threatens food security

MPs blast the government for failing to grasp the severity of workforce issues facing the food and farming sector. Nick Hughes reports.

Select committees are not known for giving governments an easy ride, however the latest report by the environment, food and rural affairs (EFRA) committee is an especially brutal take down of government incompetence and intransigence where food – and specifically labour – policy is concerned.

What did the MPs say? Crippling labour shortages across the food supply chain due primarily to covid and Brexit are threatening future food security, animal welfare and the mental health of those working in the sector. Yet the government has consistently failed to grasp the magnitude of the situation and instead deflected blame onto the industry itself.

So they aren’t happy? They are not. Reading the report you can sense the visceral anger of committee members – led by rural affairs champion and Conservative MP Neil Parish – in almost every paragraph. The minister for safe and legal migration, Kevin Foster, gets an especially rough ride for his tendency to blame the sector for not doing more to tackle the problem and not being fully on top of his brief.

What is the problem then? Across the food supply chain there are not enough workers to fill positions. In August 2021, one in eight sector roles was unfilled – that’s 500,000 out of 4.1 million. Shortages of HGV drivers and butchers are especially acute but farmers, manufacturers and hospitality businesses are also facing significant deficits in the number of people available to carry out essential functions.

What has the impact been? The report found evidence of huge volumes of fruit and vegetables going unharvested and left to rot in fields, healthy pigs having to be culled due to a shortage of processing capacity, and poultry farmers forced to cut back weekly chicken production by 5–10% thereby reducing the range of poultry products offered to UK customers.

Further down the supply chain, former FDF chief executive Ian Wright explained that labour shortages were having a big impact on food manufacturers’ capacity resulting in around one in five orders not being fulfilled for supermarkets and hospitality.

And what about the hospitality workforce? Businesses have suffered a double-whammy from their own labour shortage as well as the supply chain impact. In her evidence to the committee, UKHospitality chief executive Kate Nicholls said there had been a 10% vacancy rate within the hospitality sector since the end of lockdown in July 2021, which equated to around 200,000 workers. These shortages, along with broader supply chain issues, were suppressing revenues by 15 to 20%, according to Nicholls, who revealed that a quarter of businesses have had to cut hours, close venues, refuse bookings and turn away events simply because they don’t have enough staff.

Presumably the imbalance of supply versus demand has pushed up wages too? Exactly. Wage-rate inflation is running at 11% to 13%, according to Nicholls, meaning businesses have had to review their pay and benefits in order to keep existing staff and attract new workers. In January, for example, Pret announced its biggest ever increase in pay and benefits for shop staff. Basic pay at the chain increased in April from £9.40-9.56 to between £9.80 and £10.15 per hour depending on location, while its mystery shopper bonus, awarded to teams on top of their weekly pay for good service, has been hiked by 25% to £1.25 per hour.

At farm-level the impact on wages is ever greater. A producer of strawberries told MPs it had increased wages by 50% for seasonal pickers yet was still only able to recruit about two thirds of the required workforce.

Wage inflation across the supply chain was contributing to higher prices at the till even before the effects of the Ukraine war were being felt.

What has caused this labour imbalance? Although MPs recognised the challenges in disentangling the various causes and effects they were clear the evidence pointed in two key directions: the covid-19 pandemic and Brexit. A quicker than expected recovery in the economy from the pandemic in 2021 meant that a ready supply of domestic labour to fill roles vacated by overseas nationals returning to their home countries never materialised. Meanwhile, a new UK immigration policy focused on attracting skilled workers and largely excluding those working in the food supply chain has exacerbated the shortage of workers. Short-term fixes like temporary visas for butchers and HGV drivers have generally been a case of too little too late, the committee said.

So how do we get out of this mess? It won’t be easy and will require a mix of short-term sticking plaster solutions and long-term strategic thinking. As a priority, the MPs are calling for faster, more effective temporary short-term visa schemes for the upstream food supply chain to plug gaps on farms and in processing facilities.

Longer-term the report calls for a step change in how the whole of government engages with industry “taking seriously the concerns they raise and acting promptly on them”. There was strong support among witnesses to the enquiry for the government to produce a long-term labour strategy focusing on domestic workers and technological innovation. Nicholls said this was needed to understand “what we are looking for in terms of skills, training, development, jobs, the economy, how we get from here to there and what short-, medium- and long-term interventions we need to help support that”.

And if the government fails to deliver? Then the food sector in this country is in real trouble. The committee says failure to act risks shrinking the sector and causing higher food inflation which in turn will make UK producers less competitive compared with their counterparts overseas. The knock-on effect is that the UK will become more reliant on food imports as we export our food production capacity and the jobs it supports abroad.

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