Coronavirus Scotland: Rural traders face ‘double whammy’ labour shortage from Brexit and Covid

RURAL tourism and hospitality businesses in Scotland face a “double whammy” of Brexit and Covid exacerbating labour shortages, MSPs have been warned.

Holyrood’s Economy and Fair Work Committee, heard that businesses more dependent on EU workers are facing a more uncertain future, particularly in rural parts of the country.

Brexit has been blamed for contributing to a shortage of workers in hospitality and haulage, amplified by the changing economic landscape brought on by the Covid-19 pandemic.

Chris Brodie from Skills Development Scotland, told MSPs that over the last 18 months, Brexit and Covid have “amplified” the impact on the labour market.

He added: “The hospitality sector struggle to recruit, the food and drink sector struggle to recruit, road haulage issues have been an issue that I know the industry has been concerned about for a long time prior to the pandemic.

“What we are seeing is a concertinaing of recruitment activity and change in the labour market you would normally expect to see over five years taking place over a very short period of time.”

He added: “There’s lots of evidence to suggest that lots of EU nationals may have gone home during the pandemic to their home country and have not been able to return.

“We’re also beginning to see emerging skills shortages which are as a result of change in the demand for skills in the wider economy but are not related to either Brexit or Covid.

“What Brexit and Covid, in particular, has done is driven a pace of change to the economy that nobody anticipated prior to the pandemic.”

The Fraser of Allander Institute’s Mairi Spowage stressed that “in rural areas, tourism and hospitality was more dependent on EU labour to help fill vacancies”.

She added: ”In a way there is that kind of double whammy – businesses may have been hit harder (by Covid) and also as things do open up and get better, it might mean that they have less capacity to grow as we would like them to in order to support the economy because they just cannot get the supply of labour that they need now due to us leaving the EU.

“Social care is another one that was particularly dependent on EU labour. A big issue around that is obviously about the terms and conditions and the salaries and so on for social care.

“Some of it is also just about suppling people with the appropriate skills who wish to work in that industry which again, we’ve plugged in the past, through EU labour.”

Nora Senior from the Enterprise and Skills Strategic Board, warned MSPs that the move to remote and digital work, forced on by the pandemic, could hamper some businesses now competing with rivals overseas.

She said: “Both Brexit and Covid have impacted certain sectors. One of the areas where we are more exposed is perhaps on digital skills.

“A lot of design companies, for instance, or comms companies, because we are now more used to working online, it actually opens up the competition from international markets for pieces of work to be undertaken anywhere in the world.

“The focus on digital skills, for me, is one of those areas where we are still lagging some of our international competitors. Some of the other areas where there are deficits if you like or a lack of employment are sector-specific around tourism and hospitality and agriculture.”

The UK Government has been criticised for removing the furlough scheme later this month.

But Ms Spowage suggested that move could help businesses struggling to recruit.

She said: “With the furlough scheme coming to an end at the end of this month, there’s obviously going to be a sizeable proportion of people who have been on furlough throughout the summer who will then potentially be released.

“It might be, maybe, that some of the shortages we are seeing in the hospitality industry could be sorted out by that correction of some labour being released – but we just don’t know yet.

“I suspect that some of the wider structural challenges in our labour market in terms of supply of labour, proficient skills or the right skills for posts or just overall supply in general, are still going to be challenges.”

But Mr Brodie warned that “it’s clear that some people will not go back to their jobs when the furlough scheme ends”.

He said: “We’ve seen lots of evidence of people taking decisions to leave the labour market.

“It may be that the business doesn’t open up and the job is not there to return to – it could also be through choice, individuals have decided to either change career or find another job.

“The labour market that people will be looking to go back into at the end of furlough, at the end of this month, is much stronger than it would have been 18 months ago.”

Mr Brodie added: “We absolutely want to ensure that people in Scotland are getting the right skills for jobs in Scotland.

”But we need to think hard about how we’re bringing people into the country to fill jobs, not just at the bottom end of the labour market, but also highly-skilled jobs in the digital technology sector and the financial services sector.”

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992