Hotels and tour operators have become increasingly concerned about managing their supply chain in order to ensure quality and to address sustainability. Companies are increasingly aware of the challenges of maintaining supplies of food and other inputs at competitive prices in a global economy where rising resource costs are exerting upward pressure on prices. Carbon reporting has increased awareness in the sector of their responsibility for their supply chain over the last ten years. There has, however, been less concern about the terms of employment for outsourced labour in hotels and restaurants.
Over the same ten years there has been marked growth in the use of agency, contract and zero hours contracts. Employers in the sector are attracted by the cost savings that can result in lower payroll costs and little or no management responsibility for performance, holiday pay and sickness. Outsourcing the supply of labour and the management costs associated with employment is attractive.
The casualization of employment in recent years has been significant; in part as a consequence of the recession, in part as employers reduce costs and reduce liabilities to increase profitability. In the UK government funded 2011 Workplace Employment Relations Study, published in May 2013, 49% of employees in hotels and restaurants reported that their workplace had been impacted by the recession a great deal or quite a lot. Between 2004 and 2011 there was a marked increase in zero hours contracts. (In restaurants they increased 19%, in hotels 4%) The same survey reported that hotels and restaurants were the least likely to provide workplace training.
Last year at WTM there was a panel discussion on Employment in Travel and Tourism: the Responsible Tourism Agenda for the first time (click image above to watch) . Kevin Curran chair of the Unite Central London Hotel Workers was critical of the hospitality sector and argued the business case for paying the London living wage and the equity argument. Ufi Ibrahim from the British Hospitality Association talked about the work being done to grow the sector, create a well-trained work force and the Big Hospitality Conversation.
The presentation by these two speakers reflected the chasm between those who focus on the growth in employment in the sector and the opportunities for progression; and those who are concerned about the exploitation of low paid labour in the sector.
There has been growing concern on the UK about major companies which do not pay tax, there is also concern about the subsidy which is paid by British tax payers to employers who pay wages which are not high enough to enable their employees to live without a subsidy from UK tax payers.
Government funded research by Yara Evans and colleagues from Queen Mary College, part of the University of London , and published in 2007 found that: “hotel employers had been using agency staff as a means of cutting down on labour costs, rather than using such labour to cover for absences, leave or retirement .” Agencies increasingly use a piece rate system which requires workers to clean a large number of rooms in order to achieve the national minimum wage. The researchers found that 16 of the 25 in-house workers earned more than the national minimum wage and 24 out of 33 agency workers earned just the national minimum wage or rates below that.
The sector clearly creates employment opportunities, zero hours contracts benefit some employees offering a flexibility which they find attractive and the sector is still one in which people can work their way to senior positions. But there is concern about employment conditions and tax payer subsidies in a sector which is growing rapidly.
How long before consumer awareness of employment conditions in the sector grows and they see the disconnect between hotels ensuring fairly traded coffee on the table but showing less concern for the labour conditions of the agency and zero hours staff waiting the tables?
These are both outsourcing issues – and you can’t outsource responsibility.
Do please share your comments below and if you would like join the panel at WTM in November or know someone you feel we should invite please let us know.
I think coupon companies, online “deals” etc are pushing many in the tourism industry to the brink. Consumers’ insatiable demand for the best deals has left the industry with little profit margin. I think many in the industry are struggling to maintain quality and at the same time reduce costs to cope with the phenomenon. Would be keen to hear what others in the industry think.
Rhetoric and reality – still worlds apart in many aspects of tourism and hospitality. ‘Employees our most valuable asset’ versus ’employees as a cost to be minimised’. Despite years of lip-service to the former, we continue to observe the latter. A fundamental rethink of the role and rights of the employee is required that goes to the heart of the business and society relationship.
Thanks for the article Harold, it’s important to keep talking about this unethical lack of focus on the social sustainability agenda. Margins are shrinking in all industries, this affects even more the tourism sector where low paid and seasonal jobs are the norm. It’s good to see tourism workers are striking…back! Hopefully consumers’ perceptions will follow.
I was shocked by this session at WTM. I have always associated Fair Trade with countries in the developing world. It is sad therefore that in countries like Germany and Belgium farmers have started selling milk on fair trade principles. Shoppers buying the milk know that the farmers will receive enough money to cover their costs and make a fair profit as many producers are selling at and sometimes below the cost of production.
To learn that hotels in London charging over £500 per night might be paying the statutory minimum wage employees was something I would have expected in India. Instead I learned at another RT session that the employees at the Taj Mahal Hotel in Mumbai put out of work by the bombing in 2008 were still paid by Taj Hotels while the hotel was rebuilt. The company also undertook to support their dead employees’ orphans until the end of their education at 18.
I’d love to know the result of Ufi and Kevin’s discussions. As a travel consumer looking for accommodation in London and supporting Fair Trade principles would my best option be AirBnB or Wimdu?
Harold, I have emailed Ufi and Kevin to ask for an update on their discussions. I am disappointed to say that I have had no response. Please will you try to get an update for me.