Labour: The operational risk leaders can’t ignore

Talking about people and tech

Workforce constraints are becoming an enterprise-wide operational risk across the food and drink supply chain.

IGD spends a lot of time talking to business stakeholders about workforce issues, but most of those conversations are with HR specialists or in dedicated HR forums.

Conversations about technology are quite different. Technical innovation – especially in hot areas like AI or social media – seems interesting to more people.

For example, tech features frequently in trade shows and conference programmes, whereas workforce issues rarely do.

This matters because workforce constraints now affect cost, service levels and resilience. A business is a place where people and equipment come together to serve a need and to supply a demand.

Business leaders should therefore pay attention equally. Both technology and people should be everybody’s business, since both are essential to serving demand.

Business as usual

In the food and drink supply chain, businesses have faced recruitment and retention challenges for many years.

This has persisted long enough to become a situation rather than a problem and managing it is business as usual for many IGD members.

Reasons for this are well understood, with perceived low pay and job status being central, along with low awareness of the opportunities available.

Business leaders have found ways to adapt and cope with labour shortages, as they always do, limiting the impact on consumers. Approaches include:

• Investing in tech – For example, many quick service restaurants (QSRs) have replaced counter staff with ordering terminals, allowing workers to focus on back-of-house tasks.

• Redesigning roles and building internal pipelines – For example, we’ve seen a subtle shift in manufacturing engineering roles towards reliability, process and project delivery to drive efficiencies (rather than traditional troubleshooting and fixes), alongside more apprenticeship pathways to fill vacancies and upskill existing employees through the levy.

• Asking existing workers to do more – For example, asking workers to work more flexibly or to work overtime.

These approaches buy time, but they have limits.

A quiet crisis building

This cannot go on forever, unfortunately. Current adaptations are reaching their limits and a workforce crisis is building - see our recent report Food and drink workforce – a quiet crisis building?

A crisis that, right now, is mostly being talked about in HR offices but which might soon become more widely known, as problems become harder to contain. Reasons include:

• Technical limitations – Despite capital investment and innovation, many food and drink roles remain hard to automate and still require human labour, pending further advancements.

• More capacity needed – Food demand is currently very flat, but the UK population is growing in the long term, meaning that more food and drink will be needed.

• New costs arriving – Legislation continues to develop, making employment more expensive and complicated, especially casual and short-term employment such as “Saturday” jobs.

• Immigration policy – For many years, UK food and drink businesses were able to recruit willing workers from Central and Eastern Europe, but this source began to dry up from around 2016. Since EU Exit, UK immigration policy has focused on high-skill, high-pay workers – not necessarily what the food system requires.

• Demographic change – The population is growing, but also ageing. Retirement of older workers – and consequent loss of skills and experience – is a growing problem.

Warning signs

The timer is clearly ticking on a workforce crisis in the food and drink supply chain and, as this runs down, the scale of challenges is likely to grow, making solutions increasingly difficult.

This raises the question of what might happen as time rolls on. IGD anticipates no sudden explosion, engulfing the whole of the food and drink system, unless some new factor (e.g. a pandemic) intervenes.

A more likely scenario is a slow burn event, unfolding over an extended period. This will be characterised by various trends, including:

• Business decisions constrained by lack of staff or skills.

• Decreasing business effectiveness (e.g. more effort to get same recruitment results).

• Falling service levels (e.g. less in-store activity, more out-of-stocks).

• Low resilience.

• Low retention and workforce poaching.

• More overtime for existing workers.

• More vacancies  and longer vacancy durations.

• Rising employment costs.

• Staff burnout and low engagement.

Slow burn does not imply that these trends will be harmless. In fact, the cumulative impact could be extremely costly, with consumers ultimately sharing in that cost.

These are all issues that really deserve wider discussion across the food chain. They will affect all job functions, so they should not be restricted to HR-only. Likewise, personnel across all job functions will need to take part in finding the solutions.

What to do

Fixing the food and drink workforce problem – and the wider UK labour challenge – is partly a policy challenge for government.

Government is, indeed, taking some steps to help move the inactive and unemployed back into the workforce, although there is still much to do and rapid progress is unlikely.

In the meantime, food and drink businesses have work to do. If current approaches to workforce management are, indeed, running out of room, then a new approach is needed.

We know that young people who meet with employers whilst at school are five times less likely to be NEET “not in work, education or training”. IGD’s schools programme is one of the largest industry-supported employability initiatives in the UK and has trained over 130,000 young people across more than 30% of UK secondary schools.

It is our ambition to expand our efforts on the workforce agenda with the re-introduction of Feeding Britain’s Future. A UK food and drink industry united movement, led by IGD, to build a confident, skilled and future-ready workforce. Interventions include:

School workshops

IGD’s one-hour virtual workshops give thousands of young people across the UK the chance to engage with industry professionals and build employability skills.

Engineering pilot

We are also exploring how targeted interventions can tackle specific skills gaps. Our engineering workshop pilot, in partnership with Engineering UK, aims to inspire the next generation of food engineers through interactive, hands-on workshops in schools.

Engineering UK research shows 46% of students aged 11 to 18 express interest in engineering careers, but teachers lack resources to provide industry-specific advice. In addition, 16% of the UK’s engineering workforce is female, and just 12% are from ethnic minority backgrounds, signalling an opportunity for targeted intervention. As a result, the pilot will put a particular focus on building confidence and aspirations among young people from underrepresented groups. 

In addition to our ambition to scale our work in schools, we are expanding our interventions to reach young people through Careers Services and Universities, and continuing to deliver campaigns, such as Mmmake Your Mark, to drive awareness and challenge poor perceptions of careers in food.

Looking ahead, we aspire to support the Government’s ambition to guarantee every young person 10 days’ worth of meaningful workplace experiences.

Work experience

Working with The Careers and Enterprise Company, we are delivering the first sector supported pilot to explore how food businesses can provide more flexible experiences of work to help young people to build confidence and develop practical transferable skills.

As well as delivering impact for young people, evidence shows that providing experiences of work can provide employers with the talent, skills, and diversity they need for the future. The Quiet Crisis report provides a summary of our industry’s growing workforce and skills challenges.

It is time to take workforce issues as seriously as technology. So, if you would like to know more about any of these initiatives, please email [email protected].