Hospitality suffers 540,000 jobs in 2020

Hospitality suffers 540,000 jobs in 2020

Hospitality Suffers 540,000 job losses in 2020 and is on the verge of losing a significant amount more.

There are many industries that have suffered throughout 2020, but hospitality has been near uniquely placed at the forefront of every conceivable damage the pandemic and social restrictions could throw at it. That’s not to say that other sectors have not had it hard, but few will have to had to navigate the never ending variations of restrictions and closure hospitality has.

Analysis from S4labour shows that the result has been 539,000 job losses; circa 20% of total hospitality employees, during the full calendar year. By contrast, every other year (we looked back to 2010) has had positive growth of hospitality employees.

Hospitality employment has always had peaks and troughs, however, last year, we can quite clearly see figures align, not with the usual seasonal trends, but with government policy announcements. The first spike in job losses occurs in weeks 11-13, in March 2020 where 91,000 employees were let off in a three-week period, just as the crisis hit and hospitality was shut; government support was not foreseen at this point. There was another spike of job losses that occurred of 42,000 in one week just as the government announced the November restrictions and all but cancelled Christmas.

The only occurrence of a positive new starter rate since March 2020 occurs in the week 3rd August; the start of the EOTHO scheme. However, this was just after two spikes of job losses in July, likely to have been caused by the end of fully supported Furlough, covering NI, holiday pay and pensions.

Trends identified in this research shows clear lack of foresight by the government, as has followed for the whole of this crisis; a lack of clear communication with the industry that accounts for 5% of UK GDP and 10% of UK employment. S4labour demands that hospitality is provided with a roadmap, a clear and concise mission aimed at the opening of hospitality, to prevent another huge round of job losses in the next few weeks, following the announcements on Monday. The lack of foresight and the suggestion of just outside pubs and bars opening, will bring yet another round of job losses to those pubs and bars with no option to serve outside. It simply isn’t enough to say that pubs and bars can only open with very aggressive restrictions, as this does not bring profit that is desperately needed at a time where the industry is run to the ground. Pent up demand and the knowledge that it is safe to go to a socially distances pub cries for pubs to be given a clear opening date on the 22nd Feb when we are to hear whether we sink or swim in the next few months.

Chief Customer Officer Sam Wignell added “It is crystal clear, it is not the viability of these hospitality jobs that is the issue, it is the lack of reasonable communication and clarity. If the government is serious about keeping jobs, when we are on the verge of losing a significant amount more, a clear road map and a stimulus package similar to EOTHO is required.”

The True Cost of Furlough

The True Cost of Furlough

Furlough costs the UK Hospitality industry in excess of £542 million a month during lockdown – The True Cost of Furlough

Furlough has been a lifeline for so many businesses in the hospitality sector and beyond, however despite all that the scheme has done to ease the mass redundancies and retain jobs in the sector, it is clear that Furlough is not the free lunch it is sometimes portrayed as. Operators using the scheme benefit from a grant that covers up to 80% of their employee’s average earnings (probably the most simplistic way of describing the behemoth of complex exceptions, limits and grey areas associated with the CJRS). For many employees, this money will see them scrape through the crisis, albeit uneasily. However, for the employer, the ability to be able to keep teams employed comes with a cost and it is no insignificant amount.

For a start, the employer continues to pay National Insurance contributions, holiday is still accrued, and pension costs are not included in the grant. The total figure for average extra employment costs per month per site, over and above government furlough support, comes to: £3,738 which means the monthly furlough bill for hospitality comes to £542 million.

On top of employment costs, operators have rent to pay, utilities and insurance payments; government grants based on rateable value are available and are aimed at offsetting a large sum of bills, yet leave operators constantly out of pocket. There are also variable costs to using the Furlough scheme, such as cash flow costs owning to the fact that the scheme pays in arrears: operators are seeing the money leave their businesses, before being able to claim it back. For most businesses who have little or no expectations of trading profitably for the first 4-6 months of 2021, funding is becoming more and more critical.

Rob Pitcher, Chief Executive of Revolution Bars and user of S4labour said that the scheme, while welcome, has cost the business £1million at a time it has seen revenue vanish.

Sam Wignell Chief Customer Officer at S4labour added: “With the current levels of government support, businesses are going to run out of cash before they get the opportunity to reopen. The true cost of furlough is much higher than one might imagine.”

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