UK “long-standing” and “chronic” labor shortage cripples F&B producers

01 Sep 2023 --- Industry is urging the UK government to tackle the endemic labor shortages, which are costing producers millions – in excess of £192 million (US$243.5 million) in the last quarter alone, according to the Food and Drink Federation (FDF).

While the F&B sector continues to spearhead UK manufacturing, which is bigger than the aerospace and automotive sectors combined in the last decade, vacancies are higher in industry than in the broader economy – 4.8% in Q2, compared with 2.9% in wider manufacturing and a national average of 3.3%.

The problem is even more outsized in larger businesses, those with a turnover of £26-£500 million (US$33 to US$633.9 million), which, according to the FDF, experience the “brunt” of the shortages and half have vacancies of up to 10% – triple that of the national average.

“Significant labor shortages have cost businesses £1.4 billion (US$1.77 billion) over the last year, with companies being forced to leave vacancies unfilled and reduce production – all of which contributes to rising wage bills, higher prices and stifles growth, which is vital for a strong economy,” says Balwinder Dhoot, FDF director.

“Investment is essential if we are to build a sustainable and resilient food supply chain which supports the economy and feeds the nation. Our members are unable to expand their operations, principally because they haven’t got the staff.”

Pledging for government support
Ahead of the government response to the Independent Review into Labour Shortages, expected to be published this autumn, businesses have come up with recommendations that will require greater collaboration between industry and the education sector and focus on recruitment, retention and developing skills and technology.

Vacancies are higher in the F&B sector than in the broader economy.“We need the government to work with industry to implement all ten recommendations in the Independent Review into Labour Shortages and deliver the Prime Minister’s commitment to grow the economy,” Dhoot highlights.

“Our members are really clear that the government’s plan to extend ‘not for EU’ product labeling on a UK-wide basis will hamper growth, hitting investment, exports and jobs while increasing consumer prices and restricting the choice of products, so would urge them to reconsider their approach.”

Moreover, eight out of ten of the UK’s biggest suppliers – by turnover – believe the government’s plan for UK-wide product labeling should be scrapped.

“New arrangements to supply Northern Ireland (the Windsor Framework) came into effect in October and while well-intentioned, the plan to extend ‘not for EU’ product labeling to Great Britain will inadvertently lead to further price increases for consumers,” says the FDF.

Through the Windsor Framework, over 1,700 EU laws have been removed and a new “green lane” will exempt agri-food businesses from bureaucratic border checks at the Irish Sea – something leaders hope will bolster trade in the region.

In other related news, yesterday, the UK government announced yesterday it will delay implementation of fresh food border checks to January 31, 2024.Eight out of ten UK’s biggest suppliers believe the government’s plan for UK-wide product labeling should be scrapped.

Widespread shortages across jobs
The unfilled vacancies affect a variety of job functions and skills. 

“Particularly for project engineers, scientists, lab technologists and plant engineering technicians, as recruits often overlook the food manufacturing industry,” notes the FDF. 

Other roles deemed as “key” by the FDF, like production operatives, are also struggling to attract candidates.

Nonetheless and despite the challenges, the FDF found business confidence is starting to move in a positive direction, being at an 18-month high in August, according to the Lloyds Banking Group – however it remains low, at 41%.

“This [the higher business confidence] reflects perceptions that market conditions have stabilized after a period of volatility and unprecedented supply chain disruption following three structural shocks in quick succession – Brexit, a global pandemic and the war in Ukraine – which has disproportionately impacted food,” details the FDF.

“This led to substantial upward pressures on all cost elements of the industry, from ingredients, labor and packaging to energy, transport and logistics.”

While food inflation is still rising, the British Retail Consortium underscored this week that food inflation is “falling fast,” decreasing to 11.5% in August from 13.4% in July.

By Marc Cervera