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Managing Massive Labour Shortages In Your Business

2 min read ·  

Across Australia, there are major labour shortages of hospitality workers, with up to 80,000 vacancies nationwide. Labour shortages has made life difficult for many businesses over the busy festive season, with many venues being forced to operate at reduced capacity, or with fewer hours. Having to operate below capacity has been a difficult pill to swallow for many operators, who were hoping for a bumper season after two years of Covid restrictions.

Brad Upton is the Deputy Chief Executive of the Tasmanian Hospitality Association and has had a close-up view of the labour shortage issue as it has unfolded. The Tasmanian Hospitality Association is the peak industry body for hotels, accommodation, restaurants, cafes, caterers, community, sporting and RSL clubs in the Apple Isle, and was founded back in 1839. Mr Upton believes the crisis is deep and has a long way to run.

Hospitality businesses lost staff due to the first wave of COVID (circa March 2020) as workers left for other ‘more stable’ industries or returned home to their country of origin. We are currently seeing this issue compounded as staff are either isolating with COVID or isolating as a close contact. This means already short-staffed venues are suffering further staff shortages“

Indeed, since the onset of the Covid-19 pandemic, over 600,000 visa holders have left Australia, many of them hospitality workers. The nation’s borders have now reopened, but it could take years to make up the deficit in workers, with only a limited number of visas available each year. To make matters worse, the large scale Covid outbreak in Australia has seen tens of thousands of workers either get sick or be forced into isolation. This has pushed already stretched workforces to the limit.

No Labour Shortages Reprieve In Sight

It’s likely that the peak of the labour shortages will pass when Australia’s Covid outbreak slows – fewer people will be unavailable because of isolation and sickness. However, Mr Upton expects the core structural shortages will remain for a long time. 

Based on how the labour shortages occurred, lack of international workers and the reputation of the industry as an insecure industry to work, potentially we won’t see improvement for the next 9 months with a full recovery in staffing not expected for a further 5 years.”

Most discussion around the issue has centred around Covid isolation for workers and the lack of visa workers available, but a forgotten point has been local workers departing the industry. Hospitality became one of the most insecure industries to work in after the onset of the pandemic. Across Australia, there were countless lockdowns and various levels of restrictions applied to hospitality venues. Mr Upton believes many workers became fed up with inconsistent hours and sudden changes to their schedule, and left the industry altogether.

Being aware of these labour shortages is crucial for any hospitality business. While there is no silver bullet solution, there are a number of steps that can be taken to improve your chances of recruiting and retaining staff, as well as using those you already have.

1. Change Up Your Operations

The first step to managing the labour shortages is to make sure you’re using your existing workforce in the most optimal way. Every business is different, and often individual managers will know the most about what can be changed at short notice. Some of the most common operational changes across the industry are:

    • Reducing opening days. Shutting the venue on quieter days allows you to re-allocate staff to days where they’re needed the most. This tends to work best in businesses with high peak demand, like weekends, with lower turnover on other days.
    • Reducing operating hours. For some businesses, closing down for a couple of days isn’t an option, and would see the venue lose customers permanently. If this is the case, consider reducing opening hours. For example, a pub that opens at 5pm instead of 3pm would still serve the vast majority of its customers. One simple way to work out when you should close is to look at table booking data.
    • Use table ordering. Modern technology and apps, like “Mr. Yum” allow patrons to use their phones to order food and drinks by scanning a QR code at their table. Table service is labour intensive – using table ordering allows you to give a great hospitality experience without as many staff.
    • Reducing kitchen opening times. Consider having the kitchen only open at peak times, allowing patrons to bring in food outside of these hours. For many hospitality venues, this will allow you to give most of the great experience patrons are looking for, and avoid having to close the venue. This can also apply to other services – for example, closing off part of the venue.

While these are a good way to bridge the labour shortages, unfortunately, it is inevitable that the business loses some revenue by reducing availability to customers. 

2. Consider Offering Higher Pay

Ultimately, labour is governed by supply and demand. With the labour market as hot as it is, some businesses are offering higher pay to attract staff. The simplest way to do this is by categorising them as a higher-level employee under the Hospitality Award 2020. Naturally, if a worker applies for multiple jobs, pay will be a major consideration. With so many jobs currently available, applicants also have lots of choice.

Of course, many hospitality businesses run on tight margins and handing out pay increases just isn’t an option. If this is the case, but you still want to offer higher pay, you could consider raising prices. Inflation in Australia is on the rise, and many consumers will be expecting an uptick in prices throughout 2022, so justifying a price rise will be easier. There are many hospitality businesses who have publicly gone on the record as raising their prices – so you wouldn’t be alone either.

The same thinking can also be applied to existing staff. Experienced staff are highly valuable, and could leave to secure a pay rise. Offering these workers higher pay will show you value them, as well as avoid the costs of recruiting and training new staff. However, it needs to be remembered that not every business can afford to give out bigger pay packets for their employees.

3. Advertise Jobs Effectively

With a lot of choice, anyone applying for a role won’t have to look very far to find somewhere to apply right now. It’s important that your business advertises the position clearly, describing the role, pay, and how to apply. Roles that are clearly described will show that your business is organised and ready to make a serious employment offer, giving applicants confidence.

Advertising the role across multiple platforms is a good idea. Be sure to use your local industry associations job platform, for example, the Tasmanian Hospitality Association’s job board. LinkedIn, Seek, and even physical advertising at the premises are all good options. It’s also important to think outside the box. Consider posting the job on student notice boards, and make sure you advertise the role on both digital and print platforms. When candidates apply, be sure to get in touch quickly and to communicate professionally.

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