Ciarán Nugent: Employers struggling to recruit will have to offer better pay and conditions
Last summer, stories about recruitment problems in hospitality were reported widely. One claim was that a kitchen porter job advertised for €30,000 could not be filled. This was all framed, ridiculously, in relation to the level of the pandemic unemployment payment (PUP) being too high. A survey of employers conducted between July and November, and published recently by Fáilte Ireland, suggests a supply crisis of 40,000 in the sector.
Between July and September, 2021 — when hospitality was still under some restrictions — employment numbers in the sector all but fully recovered relative to the same quarter in 2019, according to two other surveys collected by the Central Statistics Office (CSO).
To read Sean Murray's examination of the staff shortages facing employers in key sectors, click here.
A full 56,000 workers returned to work in hospitality that quarter. This is more than national employment, across 13 sectors, has grown in any quarter in Irish history pre-pandemic. It was just about the highest figure in Irish history (180,000 workers). This is in spite of vaccines for entry, curtailed opening hours, and lower international visitors.
The results are in: all the jobs lost in the pandemic were filled or replaced by new ones when conditions allowed. This is despite the sector having the worst conditions in Ireland; the lowest pay and the highest share of part-time and temporary employment.
Restrictions brought in in December, like every other lockdown, resulted in some 16,000 employees dropping out of work again. The next round of data for the first quarter of 2022 will likely show the number bounce back.
Analysis from the Department of Social Protection in September showed 58% of hospitality workers on PUP returned to their employer, with a further 14% returning to a different employer in hospitality. Many also went to other low-wage sectors in retail and administration. Relatively few moved into higher-end employment.
Evidence of any ‘great resignation’ is just not there either. Musings of this nature are based on flawed perceptions of the labour market for younger workers. Anybody deciding to leave the labour market likely owns property or is being forced to mind children due to high childcare costs. We saw this accelerate during lockdown.
So, why are we getting the same lines again in February 2022? Inflation.
This is likely an effort to get ahead of the wage claims that will come from higher living costs this year. Inflation looks like it’s going to be around 5-6%, even higher for low-income groups.
The minimum wage increased by 3% in January. Minimum wage workers will therefore be able to buy less with their wages, pushing some further into poverty. About a quarter of all minimum wage workers are in hospitality. There will be pressure to increase not just the minimum wage, but welfare payments (remember that PUP was to blame last summer) to prevent more and more people slipping into material deprivation — this increased in 2019, 2020, and 2021 for households and workers. Some of this has already begun with extra supports for fuel costs.
The rate of jobseekers’ benefit is especially important for hospitality. If unemployment support is high, hospitality will have to offer higher wages to make work more attractive than unemployment for workers. An increase in minimum wage would likely come with any social welfare increases to avoid disincentivising work.
This is strategic messaging to warn against any increases in incomes at the bottom which will put upward pressure on wages at the bottom and impact the bottom line of employers in hospitality.
Recruitment problems in other areas such as construction and nursing are different and long-standing.
There are very few choosing apprenticeships relative to before the financial crisis. It’s easy to see why. Not only is the Irish construction market highly dysfunctional, prone to almost uniquely wild booms and busts, but employment is also increasingly precarious Bogus self-employment is a huge issue.
Earnings for craft and trades workers are the most unequally distributed of any high-income EU country. This is driven by an intergenerational earnings gap that has widened more than in any in other high-income EU country except Belgium over the past 15 years. The gap between the earnings of craft and trades workers under 30 and older ones is now the widest in Ireland of this group and the median hourly rate for young workers is second lowest behind Italy, when adjusted for living costs.
Although the equivalent figures for nursing are not available, we know that wages and conditions were undermined during the austerity years and never reset. The health service is getting worse and workloads are ridiculous.
If an employer is having trouble recruiting, the prescription is as it has always been.
Pay your workers.
- Ciarán Nugent is an economist at the Nevin Economic Research Institute
CONNECT WITH US TODAY
Be the first to know the latest news and updates
