Why the Gig Economy is Bad News for the Hospitality Industry

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Gig Economy

“a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs”.

 

There has been a lot spoken and written about the Gig Economy in recent years; some good, some bad. While many people see it as a way for individuals to take control of how they earn a living, others have pointed to its impact on traditional industries and the potential for abuse that creates a low-paid, on-demand economy. Today, we at HospitalityPost.Co.Uk take a look at the bearing this new way of working is impacting hospitality businesses and employees alike.

Hospitality is all about people

The hospitality industry is essentially a people business. In most cases, the level of service is just as important as the products on show whether you run a restaurant, own a bar or man the ice cream stand on a promenade during the summer season.

Hospitality is one of the biggest employment sectors in the UK but it also has one of the largest percentage turnovers of staff in any industry. In a Gig Economy, there’s no real problem in getting new employees on board – the biggest problem is getting qualified and gifted staff into the appropriate posts and keeping them. Poor service can cost a business and constantly having to find replacements can prove expensive as well as reputationally detrimental.

The statistics

Research by HR Magazine found that one restaurant in London had a turnover of staff in excess of 80% which was costing them on average more than £14,000 a year in recruitment outlay. For most businesses this is an unsustainable and certainly unprofitable situation.

While many businesses in the hospitality industry may welcome the flexibility that the Gig Economy provides, it has also undoubtedly meant that hospitality job security has become an issue and progressing in the industry with a clear career path has become a little muddied. It’s also led to a certain erosion of the confidence between employer and employee. That in turn may well deter valuable and talented staff from apply for jobs in the first place.

The bottom line is this: the low cost option the gig economy presents is appealing on the surface but once you get into the minutia it’s actually very damaging to the industry.

The solution to the Gig Economy

The good news is that a number of those in the industry already recognise that the gig economy may well be harming hospitality’s reputation. Technology, to a certain extent, is starting to help. Employers no longer have to rely on simple CVs from agencies or recruitment sites but can take a closer look at potential employees and see if they are an exact fit, including vetting social CVs.

Of course, this depends on restaurants, pubs, hotels and the like looking for higher quality employees in the first place and giving them a path to career progression that makes the industry look more attractive. For some this is a no brainer, particularly where the standard of service is such an important aspect of their delivery. For others, it may be less important, particularly for hospitality businesses that depend on seasonal trade and where quantity is more important that quality.

Underlying any countermeasure to the gig economy, however, are some stark essentials. Employers need to pay their staff more to attract a better quality of service to their doorstep. They need to provide the potential for career advancement and deliver quality training that makes a difference. That’s not always easy for businesses that operate on tight margins and have to worry more about their bottom line than in many other sectors.

There are many industry experts now stating that the gig economy is actually a false economy, leading to a drop in standards and the reputation that hospitality is merely a low paid sector with poor opportunities to advance. Whether the wider industry begins to listen is another thing altogether and that may well determine the future of many businesses across all sectors.

Hospitality recruitment

Here at HospitalityPost.Co.Uk, we are flying the flag for tradition, helping UK hospitality businesses find employees and vice versa. So, if you are looking for a new career opportunity in this flourishing industry, or are on the search for that perfect candidate, we can help. Contact us now for more details.

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