Resilience: labour and skills

For more information read our full report.

Labour shortages

Over recent years, the UK has experienced a very tight labour market. Vacancies still remain over 100,000 higher than pre-pandemic levels.

Almost no sector has been immune, but the food industry is the largest private sector employer in the country, employing over 4 million people and has arguably been the most impacted. Vacancy rates in UK food and drink manufacturing are significantly higher than in the wider manufacturing sector and hospitality vacancies are 48% higher than pre-pandemic levels.

Labour shortages reduce the ability of businesses to perform at their full capacity, let alone grow. Lower production capacity limits the capability of businesses to fulfil customer demand and can lead to the emergence of acute food shortages.

There are several challenges driving labour shortages in the food system, the majority of which, without actions, are likely to worsen in the years ahead.

The food system suffers from negative perceptions, held both by a prospective labour force and in some parts of government. This is partly fuelled by the nature of some of the roles available, which can be physically demanding, in challenging environments and come with unsociable hours for relatively low levels of pay.

However, this is not the reality for millions of roles within the system. There is a lack of understanding and awareness of the depth and breadth of opportunities available across the food system. Leaders across the food system have often begun their careers in roles that could be perceived negatively by prospective employees.

Negative perceptions are common across some parts of government, with many politicians and officials unaware of both the scale of the industry, the challenges it faces and the opportunities that exist when working in partnership. This negative perception can feed through to policy-making, having damaging outcomes for food availability and price.

Many roles in the food system are filled by migrant workers – they are present at all points of the supply chain and across many levels of seniority. In fact, the food system would struggle to function without them. The current migration policy is challenging for the food system and does not support businesses to access the labour they require to feed the nation.

By its very nature, the food system is present in every one of our local economies and is impacted by regional inequalities. Local geographical barriers, such as poor public transport and expensive housing, are cited as barriers to entry in rural areas. In more urban areas, competition for labour is fierce, with food businesses facing recruitment and retention challenges.

The UK’s ageing workforce is resulting in increased sickness levels, as older workers confront the physical nature of many roles in the food system. Significant risk exposure exists in specific roles. For example, if all the current engineers who are able and/or eligible to take retirement did, there would be significant shortages in these highly skilled roles that are essential to the functioning of manufacturing sites.

This situation will worsen as the UK population ages, and the working-age population shrinks, reducing the potential pool of workers available. The UK's flatlining productivity further exacerbates this challenge. At the same time, the growing population will increase volumes, placing greater demands on the industry.

Acute labour shortages can be exacerbated by a lack of diversity within specific roles and parts of the system. Any discussion around securing future labour must widen the net of people who can thrive in the roles available in the food sector.

Skills gaps

There is a skills gap in the UK with workers often under-skilled for their roles. This issue is likely to be worsened by both the digital and net-zero transitions. By 2030, it is estimated that two-thirds of the UK workforce will be underskilled, a structural issue for the UK economy.

The food system is significantly affected, with skills gaps already prevalent, particularly across engineering, digital and technical teams. In addition, the Apprenticeship Levy has had a limited impact, with businesses frustrated that it has been unable to unlock training opportunities to support those in the industry to develop their skills.

Investing in skills is critical – the training, required to produce food safely, efficiently and with some of the highest welfare standards globally is significant. This level of skill and the time it takes to train colleagues is often underestimated and yet it impacts the advice young people are given about the food industry and the availability of government funding for training.

A reliance on migrant labour increased the need to invest in specific training such as language skills, something that is currently not recognised by the funding regime.

Skills gaps are worsening productivity, exacerbating labour shortages. More than 4 in 5 managers across the UK have never received formal training, something that is brought into sharp reality when more than 1 in 3 employees have left roles due to poor management or culture.

Labour shortages will drive a transition to greater automation across the food system as discussed in chapter 9 of the report. Producing food with greater automation may reduce shortages in some areas, supporting resilience, but will increase the requirement for engineering and digital roles – skills which are already in short supply.

The economic transition required for the UK to reach Net Zero will require a re-skilling of the UK labour market, to fill those roles directly related to the transition. There is, however, a more subtle upskilling that is required to effectively embed sustainability decision-making across organisations.

IGD’s role in building a resilient food system

The combined impact of labour shortages and skills gaps on the system is significant and they present some of the greatest risks in the short and medium term – risks that have the potential to significantly disrupt food supply for UK consumers.

Successfully changing widely held perceptions of the food system requires collaboration across industry, government, and civil society over a long period of time. IGD is leading an area of work with the Food and Drink Sector Council to solve workforce challenges across the whole agri-food sector.

Businesses can get involved in our free employability programmes. These provide young people with the opportunity to develop their skills for work and gain insight into careers in the food and consumer goods industry.

IGD’s free learning programmes support those already in industry to develop workplace skills throughout their careers.