Written Evidence submitted by Mr Philippe Mandangi (LS0027)

Extract

In response to the appeal from the Select Committee for Environment, Food and Rural Affairs regarding the labour shortages, this paper will use lived experience as main methodology to analyse its extent, its reasons, the outlook in the coming months and years, as well as other factors that are currently affecting the food supply chain. The lived experience is based on operations at Dagenham Tesco distribution centre, which serves over 500 stores in and around London. This distribution centre can be used as a sample to project the situation across the industry. In my previous submission to the environment select committee, I highlighted the fact that Tesco moved this distribution centre from Hallow to London due to high absence levels from British workers, and the need to attract foreign workers, especially from East Europe. The United Kingdom is now out of the European Union, which means all continental Europeans are subject to point-based immigration system as is the case for the rest of the world. Rightly or wrongly, the debate around labour shortages in food and farming industry is framed in a way to exclude, at least partially, Brexit as the main cause. This paper will submit that Brexit is the main and only reason of the labour shortages in food and farming industry. This will be factually proven, in that, the pandemic loss of jobs in other industry did not consequentially benefit food and farming industry.

Extent of labour shortages

In September 2021, Tesco launched Warehouse Colleagues Reward Scheme that is aimed to attract and retain HGV drivers, on one hand, and to incentivise colleagues across the warehouses. Thus, from 3rd October 2021 to 8th January 2022, warehouse colleagues will be rewarded a lump sum of £300 subject to tax deduction for working their weekly contractual hours without absence, with some exceptions. The scheme will also be paying £2 extra on each overtime hour worked during this period. These temporary measures are aimed at Tesco colleagues, as well as agency supplied workers from Staffline and TRG Challenge, the two main agencies. Similar measures are being taken by other actors[1] in the industry to counteract the labour shortage.

Interestingly, these two agencies are set up and run by East Europeans, which means that they substantially recruit from the stock of East European population, until Brexit stroke. Importantly these agencies are blood lifeline for Tesco distribution centre at Dagenham, but that could be true for other distribution centre across the land – Tesco cannot function without the contribution of these agencies. Not only they supply workers, but they also serve as recruitment bases for Tesco.

Frantically, Tesco and its partner agencies embarked on assisting the existing workers who needed help in their residency status process. From April to June 2021, this campaign yielded very little result, as most of those targeted did not qualify regarding the immigration requirements. As unqualified East Europeans workers departed, Tesco distribution centre relied heavily on overtimes to run its operations. It is within this framework, that Tesco has set up “Warehouse Colleagues Reward”[2], especially in the run up to Christmas – the busiest trading period of the year.

In the efforts to offset the loss of Europeans workers,[3] Tesco has been recruiting within the British population, week in week out, from June 2021 to present. Both agencies – Staffline and TRG Challenge – brought in record of British recruits, but around 2 out 10 recruits complete their probation period, as most of them drop out for various reasons, but pressure is being cited as the main cause. Most of those British workers recruited in June and July 2021 were students, who have now gone back to study.

In reversal manner, around 3 or less out 10 Europeans recruits drop before the end of probation period, mainly for failing to reach the targeted performance or to move to better opportunities. Furthermore, not all the East Europeans or Europeans who had had their settlement have remained in the food and farming industry or have ventured to stay in the UK[4].

Causes of labour shortages

The debate around labour shortages in the food and farming industry suggests that the pandemic and Brexit are the main culprits. This paper argues that Brexit is the main cause, and if anything, the pandemic should have been a blessing for the food and farming section, in that, people who lost their jobs in other sectors during the pandemic would have found jobs in the food and farming sector, but this was not the case. It is important to note that this sector was not subject to Covid-19 restrictive measures, as being deemed essential.

The UK Secretary of State for Transport has recently conceded that the shortage of drivers in food and farming industry, is partly Brexit related. That, to my view, is an understatement, considering that the government had all the best information, best tools and all the time in the world to negotiate in the interest of the country. But if I am asked to sum up in two words this manmade crisis, at best I will call it pragmatism deficiency, and at worst, it is bad leadership. Leadership really matters; it can be experienced both ways – good and bad leadership.

The immigration point-based system lacks pragmatism, in that, the heavy reliance of the UK food and farming sector on European labour supply was not factored in as essential for the economy. This, despite numerous scientific studies[5] the consequences of restricting the people movement[6] after the exit from the European Union. Worst still the UK government locked itself out of any possibility to extend the negotiation period with a legally binding legislation, due to popular pressure to get “Brexit done”. Was it necessary for the UK economy to subject Europeans to the same immigration rules than the rest of world? This is where the UK government leadership failed, considering that the same people who demanded the end of European immigration would be the same to blame the government if the situation unravels, as it is the case. But the government is not alone to apportion the blame, the official opposition went along and should not claim otherwise.

Brexit negotiations were rushed without securing the future of labour supply in the food and farming industry. East Europeans who resided in the UK were not afforded reassurances, which caused many of them to move back to their countries of origin, as feeling of uncertainty consumed their hope for a better future in the UK. Some of those I spoke to felt unwanted. Not so surprising when the UK government, at some stage, offered financial incentives[7] to Europeans or East Europeans to move to their countries of origin, which prompted some human rights groups to denounce the stance of the government regarding the settlement scheme[8].

The Brexit process was mired with political rhetoric, that aggravated the situation as some East Europeans felt threatened with their physical integrity, which prompted them to move their families to secure lands, even if that meant foregoing vital income. Continental Europe being the main source of competitive labour to the UK, should not have been subjected to the same immigration rules as the rest of the world. And by shutting down this source of labour, the government deprived businesses in the food and farming industry of one of the key tools of competitiveness. The capitalism is meant to be based on free market, but the immigration point-based system has created a centralised bureaucracy, which dictate how people should run their businesses.

Woefully, neither Brexit not the pandemic has convinced British workers to take a stand in filling up the positions left by East Europeans. At Tesco Dagenham distribution centre, 8 out 10 British recruits drop out before the end of their 3 months- probation period citing pressure as main cause.

If there was a time when the food and farming sector should have benefited overstaffing, it should have been during the pandemic, considering the scores of job loss in other sectors. But what we are witnessing is that, despite the losses, the food and farming sector is still struggling with labour shortages. Thus, unless proven otherwise, there is no hard evidence that links labour shortages in the food and farming sector to the pandemic – all the evidence are pointing to Brexit.

The outlook of labour shortages

In its September briefing, Tesco thanked colleagues for their “continued hard work, contribution and support for new initiatives during these challenging times”, and concluded with a hopeful message, that “together we can overcome the challenges we face”. The significance of Tesco statement is that it acknowledges the existence of crisis, and in the short term, it vows to encourage the existing colleagues to commit more of their time on overtimes, while it recognises their hard working and contribution.

The current state of affairs means that the existing staff will continue to be overworked through overtimes, to allow Tesco to maintain the level of service required to satisfy consumers. This has long-term consequences, as lack of rest will result in exhaustion, which will impact on health and ultimately on productivity. Having had conversation with a handful of newly British recruited, some of them have express their intention to remain in the job only until after Christmas. The prospect to lose some of those workers after Christmas signals that it is going to take bold actions for the recovery.[9]

Additionally, the end of furlough scheme could have been an opportunity for British workers to rise to the challenge of labour shortages, especially in the food and farming industry, but current statistics point to the contrary. In fact, while figures show that the unemployment claims of universal credit are going down, and that the employment is rising[10], people could be choosing to move to better opportunities than the food and farming sector.

In terms of comparative advantage, British workers have the luxury of choice of jobs they would like to embark upon, and the supporting system of social security makes it easier for them to do so, whereas in most of European countries, especially the Eastern Europe, those advantages are non-existent. Where the supply of jobs outstrips demand, British workers who have family and government support tend to only commit for better opportunities. But the time is not on the side of actors in the food and farming sector, and the sooner that the government acknowledges that, and take the lead to support the industry, the better.

Critically, Tesco and all the actors in the food and farming sectors had heavily invested in the fight against the pandemic, which has had knockout effects on their profit margins. The labour shortages after the pandemic risks to exacerbate the profit loss and could negatively play on the treasury inland revenue. Furthermore, there is a strong possibility that the prices of food items may have to be raised to offset the loss – a prospect to be avoided as this may result on people’s heavy reliance on social security and food banks.

Conclusion

This paper has submitted that Brexit is the main cause of labour shortages in food and farming industry, by demonstrating that this industry has not benefited from the loss of jobs in other sectors during the pandemic – there is no corelation between labour shortages in food and farming sector and Covid-19 pandemic. It is also obvious that after the pandemic, the rise in employment is not reflected on the industry labour, especially where British workers are concerned. Though the highlight is placed on the HGV drivers’ shortage, this crisis is deeper – it is reflected throughout the entire food and farming supply chain.

Invariably, this crisis requires short, medium, and long-term plan, which should involve all the stakeholders – the government being the lead, as the damage that this crisis may have on government revenues, businesses profit, people’ lives, and the economy in general, could be incalculable.

The UK is not a communism country where the central government dictates its ideologies on private businesses and people’ lives. Based on free market, there are comparative advantages that can be gained by allowing neighbouring countries people to come for work purposes, and being an island, the UK borders are naturally protected on top of all the arsenals that it possesses to physically allow or disallow entry of people it does not desire.

The food and farming sector is subject to labour high turnover, it is within this framework that the government should have considered comprehensive packages of visas – point-based immigration system having been designed to exclude “low skilled” workers. The aim was to encourage businesses to employ British nationals, a popular view that still has support British Tesco employees, who I have conversation with and who still believe, that Tesco would have been paying them decent wages if East Europeans were not in the mix. But popular views are always good for the economy. The fact remains that British workers have not flocked into food and farming sector during the pandemic, and it is unlikely that they will do so as the economy start to recover.

Considering all the aspects of labour shortages in the food and farming industry, this paper suggests that food security be a national security matter of high priority, especially in the process of building back better. Since cheap technology is not yet available, the only viable alternative is manpower to avoid for crops and livestock to be wasted, which will result in farmers being forced to abandon the trade.

Having varied sources of labour should be viewed as a strategic tool in ensuring, that food security is guaranteed. The lack of it has proven to be a threat to the entire economy. Therefore, it is the government responsibility to ensure that popular views against imported labour is addressed – housing crisis that is linked to it could be resolved by converting offices that will no longer be used into accommodations. And in other quarters, churches have been signalling to lend their hands where church buildings have not been utilised.

This paper suggests that beyond the seasonal visa scheme that is being advocated, the government should expand into granting renewable working visa scheme for warehouse staff and HGV drivers, should their employers need their continuous service. Hence, every year those visas could be extended on payment of some fees, so longer as the system is streamlined. The payment of those fees may constitute a source of revenue for the government, bearing in mind that imported labour (Europeans) has huge purchasing power as consumers of goods and services. The renewable visa scheme has the advantage to limit the number of people who are allowed in the country and allay fear of those who believe that criminals are gaining advantage of the free movement of people. The practicalities on how this scheme could operate can be worked out in detail and this paper suggests that agencies that specialise in recruiting East Europeans form part of the consultation group.

Time being of the essence, the need for policy review is of high priority as food insecurity starts to bite.

October 2021