British Hospitality Association expects a decline in the sector workforce by 2021

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(qlmbusinessnews.com via uk.finance.yahoo.com — Mon, 3 July 2017) London, Uk —

The hospitality industry’s stellar growth since the financial crisis could be halted and start to fall by 2021 if the Government continues to overlook it, a new report has suggested.

Research by Ignite Economics, carried out for the British Hospitality Association, has predicted the sector’s workforce could begin to drop by 2021 with the contribution it makes to the economy also falling as cost pressures from wages and business rates bite alongside a potential labour squeeze once the UK leaves the EU.

The report’s least optimistic ‘bear case’ scenario suggests a 1pc fall in the number of people directly employed in the sector compared to 2016 to 3.17m, with the economic contribution the sector makes also starting to fall from its current level of £73bn.

While the estimated drop is small, any weakness in the industry would be a concern given it employs almost 10pc of the entire UK workforce and has grown its contribution to the economy faster than any other sector since the economic crisis.

“The hospitality sector has been largely overlooked by successive Governments, and was notable in its absence in party manifestos ahead of the General Election, as well as its absence from the Government’s Industrial Strategy,” the report said.

Ufi Ibrahim, the chief executive of the BHA, said hospitality’s growth outlook was “highly uncertain”.

“We need the Government to step up and support our industry by reducing tourism VAT, working with us to reduce the dependence on EU workers and increase the number of UK workers joining the hospitality industry, allowing the Low Pay Commission to set the National Living Wage and to bring forward a fundamental review of Business Rates,” Ms Ibrahim said.

The bear case in the report assumes the 65,000 jobs per annum that come from EU workers are no longer able to be filled and that labour productivity ceases to improve and stays at 2016 levels.

A far rosier scenario is also offered by the report, suggesting employment could grow by 15pc to 3.69m and that the sector’s economic contribution could rise 30pc compared to 2016 to £95bn. A base case predicts a 7pc growth in employment to hit 3.43m and a 22pc rise in the sector’s economic contribution compared to 2016 to £89bn.

Ed Birkin, founder of Ignite Economics, said it was “more important than ever” to promote industries with strong economic fundamentals such as the hospitality sector.

“However, there are a number of potential headwinds facing the sector, and the extent of these will determine whether the industry can continue to be a key driver of growth for the UK economy.”

By Bradley Gerrard

 

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