Summer trouble in the hospitality industry?

As restrictions lift, our attention is naturally moving towards thinking about summer holidays and eating out. Unfortunately, the news has been full of stories about staff shortages and recruitment difficulties within hospitality businesses and this could put further pressure on a sector that is already at high risk of labour exploitation. To understand the link between the hospitality industry and modern slavery, we asked George Ritchie at Shiva Foundation to explain more.

Pre-pandemic, the hospitality industry was the 3rd largest employer in the UK, and employed 10% of people across the globe. That makes it a pretty labour-intensive sector. Unfortunately, hospitality is also a high-risk sector for labour exploitation.

A spectrum of exploitation

Labour exploitation exists on a continuum – from poor employment practices (e.g. employers not providing sick pay) to forced labour and modern slavery.[1] In all cases, the dignity of the worker is diminished for the employer’s gain.

Exploitation will most commonly occur on the milder side of this spectrum because of negligence or employers cutting corners to improve their bottom lines. But forced labour is not absent - there are likely thousands of victims in the UK.[2]

Why is hospitality particularly high-risk for labour exploitation?

As with all service-based industries, there exists the possibility of labour exploitation given the labour-intensive nature of the work. But hospitality is particularly at risk due to systemic issues which produce negative outcomes for workers. These issues (and subsequent outcomes) include:

1. complex operating models breed a lack of accountability for worker welfare
2. market pressures lead to unfair employment practices
3. the high proportion of ‘low-skilled' jobs attract more vulnerable workers.

Sexual exploitation is also an additional risk in the sector, especially for hotels who may be unwitting hosts to traffickers using their rooms for exploitation.

I will explore these issues one by one.

1. Complex operating models breed a lack of accountability for worker welfare.

The hospitality industry

• sub-contracts and uses agency labour which fragments employment relationships
• is heavily franchised, so brand, owner and operator may be distinct, with little interaction
• has minimal regulatory oversight. For example, licensing is not required for service suppliers (eg housekeeping), and there is no dedicated labour inspection system in place.

The result of this is that worker welfare is not prioritised and often ignored. Firms can be completely ignorant to the problem of labour exploitation; unaware of how to spot it and with no mechanisms to remedy it. This creates the space for emboldened managers, supervisors, and sub-contractors exploiting workers for professional or personal gain, unafraid of audit, oversight and retribution.

2. Market pressures lead to unfair employment practices

The sector is labour intensive. The markets for accommodation and restaurant and food delivery services are extremely competitive. And seasonal work requires a fluctuating number of employees. In response to these market pressures, firms have consistently pushed to reduce wages while increasing flexibility in contracts. The result? Unfair practices such as:

• Workers are set up as ‘self-employed’ so employers can avoid paying holiday and sick pay.
• 19% of hospitality workers are on zero-hour contracts (ZHC) with damaging impact: ZHC workers receive an average of £236 less per week.
• Chronic underpayment of the national minimum wage (NMW) – the sector has the highest number (53,000) of jobs paid below the NMW.
• Lack of union engagement – 3.3% of employees are members of a union.

As a result, hospitality firms can become blind to the risks associated with their employment practices. For example, a cheap third-party cleaning sub-contract to the contractor may represent a situation of exploitation for a housekeeper coerced to work beyond their scheduled hours, to complete an unreasonable quota of rooms with no paid overtime and no mechanisms for redress.

3. The high proportion of ‘low-skilled’ jobs attract more vulnerable workers

Nearly half of the jobs available in the hospitality industry are ‘low-skilled’[3], have long hours and are subject to high competition. Shift and night work is common, as is temporary and part-time work which is overwhelmingly done by women. 24 per cent of the hospitality and tourism sectors’ workforce are migrants, who often have less knowledge of their rights as local workers and no support network.

Consequently, many workers feel there is no alternative to their current situation even if the conditions are exploitative. Workers at highest risk of exploitation have a below average application rate for taking cases to employment tribunals, and this silence and fear is what exploiters rely on.

What hope is there?

In the short term, staff shortages may push employers to hire workers through unscrupulous labour providers without proper audit. Post-Brexit immigration policy has limited the legal right to work of EU citizens looking for ‘low-skilled’ jobs, increasing their vulnerability to irregular migration and exploitation.

And while the labour market for hospitality seems tight right now – i.e. there are more jobs than workers to fill them – there are still only around 10 per cent more job vacancies than this time in 2019. Compare that to the 20 per cent fall in employment for the sector from Q1 2020 to Q1 2021. In the medium term, as keen, vaccinated workers re-enter the hospitality labour market post-study and post-furlough, we will likely return to a situation where supply more closely matches demand. Thus, power will shift back toward employers, who will be seeking a flexible labour force to deal with this more uncertain world, again raising the risk of exploitation.

But ethical hospitality firms can act against labour exploitation by taking the following actions:

• Transparently disclose incidents and risks of modern slavery.
• Vet suppliers before entering contractual relationships and consider if prices are unrealistically low.
• Engage directly with workers and trade unions and learn from their experiences.
• Use the Shiva Foundation Stop Slavery Blueprint and the SME Toolkit.

Shiva Foundation aims to tackle systemic inequity in the UK and India. It does so by creating tools for businesses, by providing expertise for impactful policy advocacy, and facilitating collaboration across government, business and civil society. Shiva Foundation’s hospitality work includes the development of the Stop Slavery Blueprint, a tool for hotel managers to address modern slavery risk within their business and supply chains.

[1] The International Labour Organisation defines forced labour as "all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily." It is the most common form of modern slavery.

[2] Case studies in the UK suggest that common experiences include workers paying large ‘recruitment’ fees to obtain employment leading to debt bondage, contract deception and the withholding of worker ID documentation.

[3]The UK Government Migration Advisory Committee’s definition of ‘low-skilled’ jobs encompasses ‘elementary administration and service occupations.’ These jobs, at most, require competence derived from longer form on-the-job training and a general education acquired by age 16. This is not to say that the workers in these jobs are low-skilled.