The ONS in the UK report that the hospitality sector has seen the highest redundancy rate in the UK economy, ahead of the construction sector.
The latest Business Impact of Coronavirus Survey, from the ONS, found that businesses in the hospitality industry were at the highest risk of entering administration.
The study found that 17% all accommodation and food companies currently trading were “severe risk” of insolvency, with 7% of all pubs, restaurants and hotels in the UK having zero cash reserves.
UKHospitality has estimated that at least 600,000 workers in the hospitality sector - including seasonal workers whose positions were not refilled - have lost their jobs this year.
UKHospitality CEO Kate Nicholls said: “The figures released by the ONS underline the dreadful hit that hospitality has taken during this crisis and reinforces the urgent need for targeted support.
Our sector has seen the highest fall in jobs of any. We are entering another period that is likely to be incredibly difficult for us. Businesses are in lockdown once again and when they do reopen, it will be back into a severely restrictive environment
Extension of the furlough scheme will provide some protection but scrapping the Job Retention Bonus Scheme is a major blow at a time when things could not be tighter – dramatically impacting on cashflow and potentially making businesses technically insolvent. Furlough will still mean that employers must pick up the cost of National Insurance Contributions (NICs), while receiving no revenue. The majority of businesses are operating at a loss, with little to no financial reserves and the prospect of a bleak winter ahead
“Government support should recognise that hospitality is being asked to operate under the toughest restrictions of any sector and being given the highest mountain to climb in order to survive – we need a new approach from 3rd December.”
Matthew Percival, CBI Director for People and Skills, said: "These figures show a toxic mix of a devastating rise in redundancies and very few people able to find alternative jobs, even before entering a second national lockdown. The recent extensions of the Job Retention Scheme and increased support through Universal Credit are important steps that recognise this difficult reality.
“The next couple of months will be crucial. The Government must use this time well to get ahead of the curve on the economy as well as the virus. The creation of an economic recovery commission uniting government, business and unions would be a vital step, as would rollout of mass testing and investment in job-creating projects, with a focus on digital skills and green jobs.”
The Mayor of London, Sadiq Khan added: “The latest figures show that London has had the largest quarterly increase in the unemployment rate in at least 30 years.
“Businesses in London’s retail, hospitality and cultural sectors still require more support until an operational vaccine is widely available, and we see a return to significant levels of international tourism.
“The government must ensure that all of London’s venues at risk of closure get the grants they need to cover their rent and bills, and stay afloat. As I’ve been saying since the start of this crisis, with the right support in place further mass unemployment is not inevitable.”
Insight: Chris Mumford, founder, Cervus Leadership Consulting, told us: “Hospitality job losses will have been a big contributor to the reported increase in UK unemployment figures. Particularly concerning is the unemployment rate among 16 to 24 year olds which at 14.6% is three times that of the general population. When I ask leaders how they first got into hospitality, one of the most frequent reasons given is that as a student they got a part-time job cleaning dishes, making beds, or pulling pints and subsequently pursued a career in a sector that they already knew and enjoyed. Beyond the immediate challenges, the current shortage of jobs for young people could therefore have longer-term ramifications for the leadership ranks of our industry.
“The expectation has been that there are further rounds of hospitality redundancy to come and, with no new job creation, unemployment will continue to head northwards. The extension of the UK furlough scheme, plus the joyously received vaccine news this week, may, hopefully, go some way to stall some of this and give employers pause when assessing their labour planning for 2021. Time will tell. In the meantime, for those who find themselves seeking work it remains vital to remain agile, to leverage their transferrable skills, to explore all avenues, and to be persistent.”
Editor adds: and that’s all before Brexit.