UK Businesses Battle Shortages

How Bad Were The Shortages?

Stock levels in relation to expected sales across the UK retail sector slid to an undersupply of -21%, marking the lowest figure since 1983 (according to The Financial Times). Supermarkets were the first ostensible hit, with restaurants and pubs following closely behind.

Industry experts are clear that stock is not the problem; the main issue is shortage of HGV and lorry drivers.

Supermarket Shortages

The UK’s largest supermarkets warned of supply issues throughout August, blaming the UK driver shortages.

Tesco’s chairman express concern over a 100,000 driver shortfall and Iceland’s managing director complained that a shortage of HGV drivers meant 30-40 deliveries to stores are being cancelled daily.

The greatest concerns were over milk and meat goods. At the beginning of the month, Danish dairy producer Arla reported that it was unable to deliver milk to one-quarter of supermarkets. Co-operative Group Chief Executive Steve Murrells remarked that the shortages were the worst he had ever seen.

Since then, the problem has expanded to other products and other industries.

Restaurant Shortages

Nando’s was forced to close 45 stores due to a chicken shortage, KFC warned of supply chain issues, McDonald’s took milkshakes and bottled drinks off the menu at its 1,274 UK outlets, and high-end London restaurant Novikov failed to source Wagyu beef.

Pubs also saw shortages with one of the UK’s largest breweries Green King reporting supply issues in Scotland and The City Pub Group suffering a prosecco drought.

The UK’s largest milk delivery service to households Milk & More remains short on staff.

Concerns With The Poultry Industry

Arguably the greatest concern here is the poultry industry. Last week, the Financial Times reported that 60% of the UK’s poultry workers come from EU countries. With the longer-term impacts of Brexit and new immigration and paperwork rules proving difficult, a substantial proportion of the workforce has been lost.

British Poultry Council’s Chief Executive Richard Griffith has predicted that Christmas turkey production will be cut down by 20%, indicating longer-term stress on the industry.

Analysts attribute different factors for this problem. Unite Union has argued that neither Brexit nor Covid-19 isolation rules have caused the shortage but instead terrible pay and working conditions. Founder of the 2 Sisters Food Group Ranjit Singh Borporan noted the impact of Covid-19 absences but stressed the poultry industry has suffered labour shortages pre-dating both Brexit and the pandemic. In 2018, there were 10,000 unfilled positions at slaughterhouses.

Construction Was Also Hit

The labour shortage extends beyond the food and drinks sector. Construction has been hit by a shortage of materials and labour, with lead times for plyboard and tiles extended from days to over three months, whilst prices of materials have soared. This means that refurbishment and renovations for already cash-strapped hospitality have become even more expensive.

What Is The Solution?

The Department of Environment, Food and Rural Affairs is ‘looking at ways to help the sector recruit more domestic labour and invest in automation in order to reduce the reliance on migrant workers coming into the UK’.

In practice, companies are offering substantial sign-on bonuses to staff. Recruitment site Indeed has seen an increase of 66% between April and August in the number of ads offering joining bonuses. Notable companies include Amazon, which is offering up to £1000 at various UK sites whilst Ocado is offering £300.

Talking points:

• What is the main reason for the UK labour shortage – Brexit, Covid-19 or something else?
• The UK’s furlough scheme will be entirely phased out by the end of September – how might this change the situation?