Retail and hospitality represent two of the largest sectors in the UK economy, employing 5.7 million people across the UK. That’s one in five of all jobs. Yet low pay and high staff turnover continue to be the hall marks of both industries.
As businesses within these sectors are intensely price competitive, pay rates for most employees tend to be amongst the lowest in the economy. Employers tell us that this can cause real problems in retaining good staff and that a transient workforce can lead to skills gaps and can hold back business growth.
The Social Mobility and Child Poverty Commission recognise that raising wage rates in the retail and hospitality industries is not straightforward and will require “remodelling of business practices to bring about increases in productivity.”
The Bank of England Chair, Governor Mark Carney, pointed out last week that stagnant productivity in the UK economy is a significant factor in low growth in household incomes. So whilst moral pressure might be brought to bear on big organisations particularly in financial services and government to pay higher wages, in sectors where large numbers are employed on low wages, there will have to be a different approach that focusses on enhancing staff productivity in order to raise wages.
That’s exactly what the seven projects, announced by the UK Commission for Employment and Skills (UKCES) and Department for Work and Pensions (DWP) last week are trying to do. These seven projects will see major employers such as Jamie Oliver’s Fifteen Cornwall and Rocco Forte Hotels taking the lead in improving career opportunities for low paid workers – with a direct impact on progression and pay. Pets at Home will radically redesign their senior jobs to make it easier for low paid women to progress. Retailers at the London Designer Outlet in the shadow of Wembley Stadium will collaborate to create an onsite skills academy that through upskilling staff at the centre will lead to better service and higher growth.
As unemployment rates continue to tumble, the focus of policy makers is being increasingly drawn to the issue of progression in the labour market. Over 3 million working families currently receive support from government through tax credits and as Universal Credit is gradually introduced more people will be expected to take action to increase their hours and earnings.
Getting the incentives right in the welfare system is important but it’s equally as important that employers take steps to make sure that low paid staff have real opportunities to progress in the workplace. Fixing the issue of low pay and low productivity will require government and business to work together. Just last week, at the Great Business Debate, John Cridland, Director-General of the Confederation of British Industry (CBI), one of the largest employer groups in the UK, said “The challenge is to raise the value employees can create for themselves and their employer – getting people working smarter rather than harder – so pay rates can increase and the economy can grow faster”.
The new ways of working being trialled by these seven projects will demonstrate that it is possible to change workplace behaviour in a way that enables people to be more productive, to stick around and ultimately begin to see retail and hospitality not just as the source of a job but of a career.
The UK Commission for Employments and Skills recently launched the latest in its series of Futures Programme competitions. This too deals with the issues of how to improve pay and progression, focusing specifically this time on women working in social care, cleaning and catering professions. For more information see the press release.