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How UKCES are addressing the skills gaps in the Retail and Hospitality sectors

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Even as the economy improves and more people get back to work, the issue of low pay refuses to go away. As such, I’m delighted that the UK Commission for Employment and Skills is looking to address these issues in the retail and hospitality sectors.

In April we launched the UK Futures Programme –  a series of competitions that target specific workforce development problems. Each competition offers funding, alongside co-investment from employers, to explore solutions to these issues, with the first two competitions tackling skills issues in the off-site construction, and management and leadership issues in the UK.

Through the third Futures Programme competition, UKCES are looking to co-invest in innovative, employer led solutions that develop progression pathways for low paid workers. We’re hoping to find new ways of helping people progress in work that benefit everyone. Employers will benefit from improved productivity whilst employees will from better pay and better progression opportunities.

The retail and hospitality sectors are vital to the UK economy. Between them they provide 6.9 million jobs, a fifth of all employment. They are also both set to grow, providing new opportunities at all levels. However, the two sectors are both affected by low pay, high staff turnover and poor progression opportunities.

Traditionally both sectors have had high staff turnover. The Commission’s recent research in the sector highlighted that workers in the retail sector are willing to move jobs for only very small increases in salary. This has significant repercussions for everyone in these sectors. Employers have to spend more money on recruitment and training budgets can be wiped out by the additional costs of inducting new staff into the business. This means that existing staff are likely to lose out on training that could help them progress in work, earn more and get promoted. It can also lead to skills gaps as new workers take time to get up to speed and existing staff miss out on the training they need just to keep up.

The makeup of the workforce is also an issue for both sectors. In retail, 38 per cent of the workforce work is part time and are therefore statistically more likely to be in low pay. Equally, the seasonal nature of some work reduces the opportunities for those workers to progress. Both of these groups are less likely to receive training to help them to progress and develop.

The problem also places a burden on the taxpayer. At present, £21 billion is spent on tax credits each year. These are payments made to people in work to top up their earnings. We need to find new ways of improving pay in order to help reduce this.

So, what are the Commission trying to do about it? Working with the Department for Work and Pensions, we’re making £2 million available to employers to develop progression paths for low paid workers. We want proposals to increase earnings for low income workers whilst also addressing the costly retention, recruitment and skills gaps faced by business in these two sectors.

 The Futures Programme is all about developing new ideas and finding out what works. As such we’re looking for projects that are seeking to test or pilot new innovative ideas. We’re after projects that at their core are about improving the earnings and progression of low paid workers through changes to business practices.

 The deadline for submissions is the 28th of November, so if you’re interested in taking part in the programme there isn’t much time to get your proposals in. If you are interested in taking part, the full competition brief is available here. You can also view videos from our webinar, explaining more on the competition, here.

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