The Covid-19 pandemic, alongside of Brexit, has taken its toll on the UK's food and drink industry. These two events have inevitably had a knock-on effect on supply and demand that's affected the industry's segments differently. In this blog, we delve into the challenges that the food and drink sector is facing, whilst also looking at the impacts that they have caused.
In the UK, the food and drink sector is currently experiencing a set of challenges that have resulted in fundamental labour shortages. These shortages are creating huge pressures on the sector as they are interfering with the entire supply chain - from the initial inputs into farming, all the way through to those that serve food and drink. They are shortages that are having an impact on production, processing, supply, and even demand. If these challenges go unaddressed, it will create significant economic implications for the UK.
Since the first set of restrictions from the pandemic started back in March 2020, it caused a huge surge in demand. When it comes to the demand, the sudden increase in purchases of grocery products due to panic buying, not only placed stress on supermarkets, but it had a massive impact on entire supply chains. Although there was a lot of uncertainty about how the sector was going to cope, the sector managed to show great capacity of organisation as well as cooperation between the different stages of the supply chain. However, one of the most affected areas that is still struggling is shortages of labour - without it, the entire supply chain cannot function as efficiently as it should.
Worker shortages that continue to affect supply chains across the UK could in fact be here to stay, with the CBI (Confederation of British Industry) warning that it could last for a few more years - whilst the Food and Drink Federation claim that these challenges could actually become permanent.
With that being said, we decided to look into the challenges that are impacting the sector and here is what we found:
Ageing Workforce - The UK food and drink workforce has been labelled as an ageing workforce - the Food and Drink Federation has previously highlighted that across the next ten years, 25% of the food and drink manufacturing workforce is due to retire with up to a third of the sectors' workforce set to reach retirement age by 2033-2035.
In some parts of the "farm to fork" chain, such as agriculture, this is particularly prominent. A recent report on driver shortages created by the Road Haulage Association has highlighted that the average age of an HGV driver is around 55, with less than 1% under the age of 25.
The number of people resigning from the workforce within this sector not only means a significant loss in terms of number of people that are employed, but also invaluable skills and experience. The industry can't recruit at the same pace that people are due to leave the sector, leaving a shortfall in headcount. There are many factors that contribute towards the sector struggling to recruit, but the concept of it being low-skilled and assumed to be low paid, is an extremely big challenge that they're facing.
Resilience of Migrant Workforce - Like many developed countries, the UK heavily relies on migrant labour to be able to support and enable the economy to thrive. The importance of EU migrant workers has been stated by the Labour Force Survey, conducted in July 2021, they have highlighted that there are in fact 2.3 million EU citizens working in the UK on a permanent basis - and is thought that around a fifth of these workers, work in the food and drink supply chain.
The EU exit and resultant immigration policy has since created a significant uncertainty for a lot of European workers within the sector due to their future rights to live and work within the United Kingdom. This hasn't only affected the supply chain, but it has started to impact consumers with food price inflation, long term environmental impacts and of course, the reduced availability of products.
Poor Industry Perception - A lot of the jobs within the food and drink sector are deemed to be physically demanding. This, along side of competition from other businesses means that there's limited demand from UK nationals with a significant number of people noting that a lot of this work is unlikely to be filled by those who are currently unemployed. This is also taken from the Food and Drink Supply Chain Workforce Survey, which has stated that 62% of respondents regarded 'attractiveness of the sector' as one of the biggest barriers to recruitment.
The poor perception of the sector is typically down to careers advice in schools as they're known to promote office jobs over jobs within the food and drink sector, not only this, but there seems to be a poor understanding of what the 21st century high-tech food and drink manufacturing looks like. Many applicants to the supply chain have said that they find it hard to identify opportunities and skills that are needed to be able to enter the sector due to a lack of information that's available to them - whether thats via the Jobcentre Plus or other agencies.
Skills Shortages - The sector is currently facing challenges across the full skills spectrum, with issues securing low skilled, mid-skilled and also high skilled roles - for the higher skilled roles, this can include technical managers, quality auditors, supervisors, material buyers and more.
The market for these roles is struggling with limited candidates available that have the required skillset, where they're available and also struggling with competitors also actively recruiting in the same area. Another complication is that the demand for skilled workers is also being challenged through the increase in digital technology and renewable engineering knowledge and skills required, so considering that alongside the ageing population, it could lead to a high attrition of skills in the future.
A similar challenge that people are finding is that temporary recruitment agents are struggling to find enough skilled or 'low skilled' people who want to work temp roles. Full time perm roles are clearly a lot more popular as candidates are finding more security from this, especially after the last few years, which is highly important.
It's clear to see that the food and drink sector is facing a lot of serious challenges, with the global pandemic and Brexit adding extra strain on top of its existing issues. With that being said, these challenges need to be discussed in order to try and find resolutions - whether thats promoting the sector as a career choice within the education system, reviewing of immigration policies, appropriate training, or other solutions.
Here at TRG, we would love to hear your thoughts on this topic. Is there anything you feel should be done in order to support the Food and Drink Supply Chain?