Brexit's impact is one wake-up notice after another for England's tourism industry. And the wake-up is harsh.
Cornwall, the southwest peninsula of Britain, is struggling to find enough bartenders to serve the millions who flock to the rocky coastline every year.
Any prospect of recruiting cheap labor from the continent has dried up after the region voted along with the rest of the country to leave the European Union. More significantly, pubs and hotels are coping with an ageing, dwindling workforce that often doesn’t have the right skills.
This gets to the heart of the productivity problem in the U.K., which is dogged with some of weakest growth in output per hour worked among Group-of-Seven nations.
Famed for the Cornish pasty, a meat-filled pastry, Cornwall’s beaches and pirate coves attract 4.5 million annual visitors. A welcoming smile and the ability to pour the perfect pint of beer may seem like the main qualifications for a job behind a bar.
But for the team at the Victoria Inn in Truro, a short drive from the coast, there’s another key requisite — a thorough knowledge of the pub’s finances. Each week company director Mark Holden pins the detailed breakdown of costs and income in the workers’ break room to keep them focused on the bottom line.
The idea is to both motivate and educate. It’s an example of how the relationship between labor-intensive hospitality firms and their staff is evolving. And the hope is to boost productivity — one measure shows that workers in Cornwall add just 23.74 pounds ($30) of value for each hour worked, compared with a national average of more than 33 pounds.
“It’s a cultural change — people are looking for more responsible employers,” said Holden. “What is expected of us is increasing.”
If staff want more training and bigger career goals, they’ve rarely been in such a good position to demand it. Job vacancies hit a record high in the three months through October as unemployment held at the lowest since the 1970s.
Holden has started sending apprentices out with suppliers, teaching them how to make the cakes illuminated in the pub’s tall refrigerated cabinet, digging the potatoes for the carvery lunch and going on environmental health inspections with the local authority. He sees giving them a broader view of the industry as an investment, a way to retain them at the end of their training.
Teaching workers the right skills is part of the headache facing both the government and the Bank of England. McKinsey estimates about 90 percent of future economic growth will need to come from productivity improvements just to keep pace with past rates of expansion.
That seems a long shot given it has expanded just 0.3 percent a year since 2008, compared with an historical average of 2 percent. The statistics office says that, had output per hour continued its pre-crisis trend, the economy would be more than a fifth bigger than it is now.
The government has recruited BOE Chief Economist Andy Haldane to improve productivity strategy. It’s also working with Be the Business, which runs workshops for Cornish hoteliers and restaurateurs. Based in London, it seeks to pass on best practices to firms that wouldn’t usually talk to management gurus.
Tom Ross, who runs the Home Grown Hotels group, spoke at one of their conferences at Cornwall’s scenic Watergate Bay this winter. He’s trying to find 300 staff to work at the three trendy hotels slated to open in the next year and a half. Vacancies for permanent hospitality positions have reached a 17-month high, according to KPMG.
He’s also trying to keep the employees he already has happy. Adapting to demands for a better work-life balance, the group has moved to a three-month ahead rota in its kitchens — something that raises eyebrows among small business owners used to operating on a week-to-week basis.
The European staff Ross would normally be looking to hire are no longer available. “They’re not as keen,” he said. “The French are going to Spain and the Far East instead.”
Yet concern that immigration was too high was one of the drivers of Brexit. In Cornwall, a 56.5 percent majority voted Leave — more than in the national result — and the government is now considering setting a minimum pay level of 30,000 pounds a year for skilled migrants to be allowed in.
Will Ashworth, who has increased turnover at the Watergate Bay Hotel 12-fold since he took over from his parents in 2000, is under no illusions about the scale of the job ahead.
“To be told that hospitality has the greatest productivity challenge in the U.K. and then to learn that Cornwall has the greatest challenge within the sector, it really struck a chord,” he said.
©2018 Bloomberg L.P.