24-06-2025
- Business
- The Herald Scotland
The recipe for fair work in the dining and drinking sector
'Once again, growth will be distributed unevenly and centred around small industrial clusters that have high barriers to access – hardly a recipe for driving social mobility."
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Whether the drinking, dining and entertainment sectors should fall within the remit of this or any industrial strategy is debatable, but it's clear to see why hospitality bosses are feeling left out in the cold.
Their businesses are among those hardest-hit by Chancellor Rachel Reeves' Autumn Budget, which is estimated to have increased collective annual costs across the sector by £3.4 billion through a combination of the higher minimum wage, rising national insurance contributions, and reduced business rates relief. Survey data released last week suggests one in three UK hospitality businesses are currently operating at a loss, while six out of 10 have cut jobs and 63% have reduced the number of hours available to staff.
More of the same will almost certainly follow. Stonegate Group - the company behind well-known names such as Aberdeen's Slaine's Castle and Triplekirks, Edinburgh's Slug & Lettuce, and The Merchant in Glasgow - is in talks with consulting firm AlixPartners over plans to restructure the business amid rising cost pressures. The potential 150 job losses being suggested will primarily affect head office and central functions, but it is bar and restaurant workers that are leading the exodus from the sector more widely.
'Critical foundational sectors of the economy, like hospitality, leisure and tourism, are central to creating jobs, yet overlooked," Ms Nicholls added. "This is the same approach which led to this year's employer NICs changes hitting part-time, flexible and accessible jobs hardest, while protecting jobs in the industrial strategy."
Much of the strain, as it inevitably does, is falling on the workers who remain.
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New research published today and financed by The Robertson Trust, a charity dedicated to reducing poverty in Scotland, has found that hospitality employers require better policy implementation to support the fair work practices needed by their staff.
The report is part of the Serving the Futures project that has been working directly with employers and people with experience of low-paid work in the hospitality sector to identify changes to address in-work poverty in Scotland. Researchers at the Fraser of Allander Institute and the Poverty Alliance who carried out the work said many employers are hindered by 'factors beyond their control' in the implementation of fair work.
These include gaps in transport and childcare provision, which create barriers to work for their staff, along with the impacts of the Covid pandemic, the UK's withdrawal from the EU, and the more recent cost-of-living crisis.
'Our research shows that hospitality employers often want to do the right thing by their employees, but they don't always feel supported by policy to do so," said Christy McFadyen, a knowledge exchange associate with the Fraser of Allander Institute.
"If we are to meet the 2030 child poverty targets, the Scottish Government has a role to play in ensuring that housing, childcare and transport policy support the industry and its workers.'
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Hospitality is a significant part of Scotland's economy, accounting for about 3% of the country's GDP and, before the pandemic, 8% of its jobs.
The project has found that workers in the sector face higher than average risks of experiencing in-work poverty. A third of those spoken to by researchers were on zero-hour contracts, or had no contract at all, while the median hourly pay rate was under the low pay threshold of £11.58.
"Low pay and job insecurity have a big impact on households in Scotland," said Dr Laura Robertson, research manager with the Poverty Alliance. "A lack of affordable, accessible childcare and housing, alongside continued high costs of living, is also preventing families from being lifted out of in-work poverty.
"The Serving the Future project shows key challenges facing households working in the hospitality sector in Scotland and that both employers and policy makers have a key role in tackling poverty in Scotland."
There was widespread concern among workers about a lack of effective regulation and oversight of the hospitality sector, leading to an absence of clear standards that allow exploitation and unfair practices to persist.
Staff shortages were leading to many taking on extra hours and duties, creating burnout, stress, and deterioration in work-life balance. This was sometimes the result of a practice known as "clopens", or late closing and early opening.
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One worker said: "Sometimes I could finish at twelve at night and be in at ten the next day. That's very common, as well, like 'clopens'. I think they shouldn't be legal."
Recommendation for government action, include greater collaboration with the hospitality and tourism industry, along with investment in sustainable and community-led tourism.
Employers also need better and more consistent information on best practice, legislative developments, and policy changes. Ditto for training and development opportunities, with greater financial support to back this up.
In all it rather reads like what Ms Nicholls at UKHospitality claims is missing from the new industrial strategy, bar one major point: policy measures for lowering energy prices. This will see the introduction of a "British industrial competitiveness scheme" from 2027 that will reduce electricity costs for 7,000 intensive electricity users in the manufacturing sector.
'Lowering energy bills for certain sectors is clear recognition from the government that the energy market is broken and a major barrier to investment,' Ms Nicholls said. 'We now need a clear roadmap and timeline for when the government will fix the energy market for the rest of the economy."
