1Introduction
The Tourism Alliance was established in 2001 as the voice of the UK tourism industry. It comprises 55 tourism industry associations that together represent some 200,000 business of all sizes throughout the UK. The Tourism Alliance’s mandate is to work with Government on issues relevant to the growth and development of tourism and its contribution to the economy. A list of member organisations is included as Appendix 1.
This evidence on the impact of the EU referendum on the UK tourism industry is provided to the House of Lords Committee on Economic Affairs in that capacity.
2.Tourism Sector Overview
Tourism is one of the UK’s largest and best performing industries. It is made up of 250,000 inbound, outbound and domestic travel and tourism businesses which are integrally linked to one another, often utilising the same infrastructure, consumer base and regulatory framework. As well as comprising a very high level of SMEs, the UK has some of the world’s largest tourism companies including the world’s largest hotel company, the world’s second largest entertainment company and the world’s second largest international airport.
Together, these businesses make the tourism industry the UK’s third largest employer, providing jobs for 3.1m people (over 9.6% of the UK workforce) and contribute £121bn to the UK economy (7.1% of GDP).
In international terms, the UK tourism industry is the sixth largest in the world based on value, contributing £25.4bn per annum to the UK economy in export earnings, and eighth largest based on inbound visitors (36m per annum). The revenue generated by these overseas visitors provides fulltime direct employment for 470,000 people in the UK.
The World Economic Forum also ranks the UK tourism industry as the 5th most competitive in the world, meaning that it is highly productive and able to grow strongly if provided with a supportive regulatory environment.
The size and the importance of tourism was recognised in 2010 when, at the height of the recession, the government identified tourism as one of six key industries that could provide much needed employment and growth to reshape and rebalance the UK economy.
The tourism industry’s ability to rise to that challenge has been shown by Office for National Statistics research which has found that, since 2009, the UK tourism industry has:
• Provided growth at a faster rate than most other industries
• Provided additional employment at almost twice the rate of other industries
• Increased export earnings by 26.5% to £24bn pa
Even more impressively, the ONS found that in the three years between 2010 and 2013, the tourism industry provided almost a third of the additional 900,000 jobs that were created in the UK. And unlike other industries, these jobs were distributed throughout the UK - across rural, urban and seaside communities - with all regions now having at least 90,000 people working in the tourism industry.
The tourism industry has also been at instrumental in tackling areas of “problem unemployment”. For example, with 39% of employees under the age of 30, tourism is leading efforts to reduce youth unemployment and provide school-leavers with the skills they need to start their career.
This level of performance is reflected in the 2014 ONS publication, “Estimates of the Economic Importance of Tourism” which stated:
“tourism is one of the industries which has helped support the UK economy since the economic downturn in 2008
3. Impact of Brexit on the UK Tourism Industry Labour Market
The EU nationals work in a wide range of roles and are highly valued part of our skilled workforce. They provide valuable service and language skills, international experience and actively contribute to the UK providing a high-quality experience for visitors.
Figures from People 1st, the Sector Skills Council for the tourism and hospitality industries, show that 24% employees in the sector were born overseas, of which 11% are from EU countries. However, evidence from the industry suggests that the percentage of EU nationals working in the sector varies considerably between businesses and regions and is up to 50% in London while a survey by the Manchester Hoteliers Association found that 45%- 50% of the workforce in Manchester hotels is foreign workers and, as such sourcing suitable employees represents a medium to high risk for the sector in Manchester.
Importantly, as the unemployment rate in the UK has decreased, the sector’s dependency on workers from the EU has increased. Between 2011 and 2015, the number of migrant workers in the hospitality and tourism sector has increased by 22%, with a 46% increase in EU nationals and only a 7% increase in non-EU national in the sector.
This strongly indicates that the growth in the UK tourism industry, and therefore the creation of jobs in the sector, has been greater than the ability of UK educational and training institutions to provide skilled workers, resulting in tourism businesses becoming increasingly reliant on workers from other EU countries to fill vacancies in the industry.
So, rather than EU nationals taking away jobs from UK residents in the tourism and hospitality sector, UK businesses have become increasingly dependent upon EU nationals because there are fewer and fewer UK nationals able to fill the positions available.
People 1st estimate that the sector will require 1.3m new staff by 2024 due to growth and high turnover rates.
To give an indication VisitBritain, the Government agency charged with promoting inbound tourism to the UK predicts that inbound tourism to the UK will increase by 8% in 2017 due to the fall in the value of the pound making the UK a more attractive destination. This increase will result in around 3m additional visitors and £1.75bn additional revenue for the UK economy. It is accepted by Government that every £54,000 of additional tourism expenditure in the UK creates an additional FTE tourism job. This means that this increase will create an additional 32,000 FTE positions in 2017. In addition to this, it is estimated that up to 90,000 FTE positions will be created by increases in domestic tourism due to the falling pound making it more expensive for UK residents to holiday overseas.
This high level of demand for staff comes when there are currently 10,000 unfilled positions in the tourism sector and 21% of businesses report that the staff that they are employing lack essential skills.
Critically, these shortages are occurring even while there is still freedom of movement between EU countries. Should the industry suddenly cease to have access to this broad talent pool, particularly when the UK unemployment rate is so low, it would present severe, fundamental operational challenges. Tourism businesses are already engaged in expanding apprenticeships, work programmes and retention drives. However, initial analysis indicates this shortfall cannot be filled by these measures in the short to medium term, exacerbating current staffing and skills shortages. As staff shortages increase, this will force up wage costs for businesses.
As such, if the tourism industry is to continue to grow and provide the UK with increased export earnings, then a mechanism needs to be established by which businesses can source the staff required.
There are particular staff shortages for chefs in pubs and restaurants who need specific skills. It also should be noted that many businesses in major towns and cities rely on overseas workers and it would be impossible for all of these jobs to be filled by the local workforce. In pubs in particular, but also elsewhere in hospitality, soft skills are as important as skilled workers.
3.1 Outbound Tourism
A separate issues that is of importance to outbound travel businesses is the ability able to hire, and utilise staff, across Europe with minimal barriers. The Posted Workers Directive ensures that businesses can move staff to other EU countries for short period’s time without the need to enrol staff in local systems of social security, such as pensions systems. This Directive is extremely important to UK tour operators, in particular, who use the flexibility provided to place seasonal tour representatives in resorts across the Union. ABTA estimates there are between 3500-4000 posted workers within the UK travel industry.
3.2 Maintaining Tourism Employment
To help resolve the issue of finding skilled staff, the tourism industry would want the Government to negotiate a deal with the EU that retains the ability of EU nationals being able to come to the UK to work in the UK tourism industry. If retaining the free movement of EU national to the UK is not possible then the current migration system needs to be revised before the UK leaves the EU.
One way to achieve this is to reopen TIER 3 and have the Migration Advisory Committee work with People 1st to monitor staffing requirements of the tourism and hospitality industry and develop criteria for allowing people into the UK fill shortages in the industry.
We would also urge the Government to consider opportunities for targeted use of work permits for priority sectors and a review of the Shortage Occupation List to facilitate business growth.
In terms of work permits, many tourism destinations such as London and businesses that predominantly facilitate corporate travel operate year-round and there is little seasonal impact. As such, short-term solutions will not address recruitment challenges or support the sector’s commitment to grow and develop skilled staff to work in the industry for the long-term.
Those employed in tourism work in a range of skilled and so-called ‘unskilled’ or entry-level roles. Many of the sector’s employees, even those in entry level positions, have excellent customer service, culinary and language skills. We would therefore ask Government to consider these factors when evaluating what constitutes a ‘skilled’ job in relation to any future work permit system.
Appendix One - Tourism Alliance Membership
ABTA - The Travel Association
AGTO
Airlines UK
Airport Operators Association
ALMR
ALVA
ANTOR
ATHE
BACTA
BALPPA
Bed & Breakfast Association
British Beer & Pub Association
British Destinations
British Educational Travel Association
British Holiday & Home Parks Association
British Marine Federation
Business Visits & Events Partnership
Camping & Caravanning Club
Churches Visitor and Tourism Association
Confederation of Passenger Transport
Country Land and Business Association
Cumbria Tourism
EASCO
English UK
European Holiday Home Association
European Tour Operators Association
Family Holiday Association
Farm Stay UK
Group Travel Business Forum
Heritage Railway Association
Historic Houses Association
Institute of Tourist Guiding
Liverpool City Region LEP
Marketing Manchester
National Caravan Council
National Coastal Tourism Academy
National Trust
New Forest Destination Partnership
Outdoor Industries Association
Premier Cottages
Resort Development Organisation
South West Tourism Alliance
The Caravan Club
The Tourism Alliance Brighton and Hove
The Tourism Society
Tourism For All
Tourism Management Institute
Tourism South East
UKInbound
Visit Cornwall
Visit Kent
Visit Wiltshire
Welcome to Yorkshire
Wyndham Worldwide
Observers
Local Government Association
VisitBritain
VisitEngland
20 February 2017