Workplace Report (September 2021)


Labour shortages: what’s the impact?

What do the labour shortages being reported in the media mean for unions and for pay?

The shortage that has so far received the most attention is of lorry drivers – which is having a knock-on effect across multiple industries. The Road Haulage Association (RHA) estimates the shortage of HGV (heavy goods vehicle) drivers at 100,000 and a Logistics UK report shows that “29% of logistics businesses anticipate that they will be unable to fill vacancies for HGV drivers this year; a further 14.5% expect long delays before filling a role”.

The problem is being blamed on a loss of EU drivers due to Brexit, as well as the pandemic, which meant that 30,000 HGV driving tests were unable to take place last year.

Steven Gerrard, a Unite official for the union’s road transport sector who himself drove for 29 years, says that a shortage in drivers has been going on for a long time; and the reasons for it are deeper than just Brexit and Covid.

He says the crisis has been brought about by: “Low pay and the continued customer-driven race to the bottom. In years gone by companies would compete for contracts on service and performance, but in the present day, it’s about who can do the job at the lowest possible rates. The long hours culture also doesn’t appeal to potential new entrants into the industry.”

The cost of training and the conditions of work are also another barrier for recruitment, he added. “The training to enter this industry is extremely expensive, and once a driver is qualified as an LGV (large good vehicle) driver, most companies don’t provide the periodic training that is a requirement”.

Another issue for drivers is that some hauliers are not prepared to pay for overnight parking on motorway services, nor truck stops. According to Gerrard, this means drivers are forced “to park in a layby, which is dangerous, or on an industrial estate where they have no access to food, toilets, or washing facilities”.

In response to the recruitment crisis, the government has temporarily relaxed the Driver’s Hours Rules – meaning drivers can drive for 11 hours twice a week, up from nine. However, this is temporary, and compromises safety standards. .

Employment agencies are currently charging very high rates to supply drivers to companies in need. Most employers have a long history of supporting these agencies and the insecure work they provide, which in itself has driven down terms and conditions.

At the Mini Plantin Oxford, the haulage firm, Imperial Logistics, responsible for bringing the components into the plant, is being hugely affected by the national shortage of HGV drivers. They need a team of 70+ substantive drivers, but only have 32.

To try and entice agency drivers the company is offering a higher hourly rate for agency workers, which angers those on substantive contracts, who leave to work elsewhere. The result is an increase in the need for agency workers, creating a vicious circle.

To try and combat this, the company has made a one-year pay offer for 2021, which is currently out to a ballot of the drivers. The offer comes in as an average pay award of 15.8%; however, according to a union official, it’s likely that this will be rejected as it still doesn’t match the hourly rate offered to agency drivers.

Incentives to drivers not enough

A number of employers are offering bonuses to new joiners, but so far this has not been enough to resolve the shortage. After a year when employers have used the pandemic as an excuse for offering only limited pay rises, union members are angry that their companies appear to suddenly be able to find the money for new starter incentives.

The Community union has seen employers offering/proposing:

• an extra £100 for staff to work a rest day;

• £2,000 to new starters;

• £1 per hour uplift (equivalent to 8%) – but only at one depot, causing a reaction at other depots of the same employer;

• double time pay on a rest day;

• immediate overtime payments once base contracted hours are achieved (removing banked hours);

• increased refer a friend bonuses;

• peak December bonuses of £500 (for all);

• improvements to sick pay;

• guaranteed hours increased; and

• attendance schemes.

Unite has also seen employers (Gist, Tesco and others) offering retention bonuses However, this has led to existing drivers demanding an increase in salary and improvements to their terms and conditions.

Pay increases

There has been some uplift for existing drivers, with some employers offering relatively substantial pay rises:

Bidfoods increased existing lorry drivers’ pay by £4,000 a year to £35,000 in June as they needed to recruit new drivers;

Bookers Retail Partners increased the hourly rate of all HGV drivers by £5 on a temporary basis (until pay talks) at its Hemel Hempstead depot to stop losing drivers and address the low pay situation. However, the company refused to give a similar uplift at its Thamesmead depot, where 30 drivers are now being balloted for industrial action which may affect up to 1,500 convenience stores;

Hoyer Petrolog Hemel Hempstead increased the basic salary to £45,000 per year, with an estimated OTE of £56,000;

XPO (Arla Milk Hatfield) agreed a pay deal worth a minimum of 20% with Unite members;

• Unite at Great Bear Distribution Port Sunlight recently negotiated a 12.32% pay increase on all monetary items. In addition to the pay increase, time plus half pay rates have been increased from time plus a third; and

Polypipe has given a big increase in the wages of drivers (from van drivers up to class one). This is being increased by 15% from 19 July because of a problem recruiting and retaining drivers. This increase is 12.8% above the wage rise for all other employees.

Several unions have said that negotiations for drivers are ongoing. They are being consulted on changes to terms because of the shortage of drivers impacting on their work/life balance and health/wellbeing. One official is in negotiation with an employer which is currently considering a 17% pay increase.

Other sectors

Food manufacturing is another sector facing labour shortages. One example is Addo Foods in Poole, which depended extensively on eastern European labour, which has pretty much dried up since Brexit. The company admits that it now has a recruiting issue. Its response has been to offer a 1.8% pay increase, which the Unite official responsible for the site thinks will not attract anybody extra.

Brown Brothers, a cooked meat manufacturer in Kelloholm, Scotland has also been experiencing labour shortages and embarked on a recruitment exercise for office and production operatives. Unite reports problems with increased workloads for existing staff, which in turn is also resulting in increased absence. Also there is a shortage of drivers employed by another company within the group.

In response, drivers are being given a 50pph increase. The production operators were previously on the national minimum or living wage, depending on age. The company has now increased the living wage rate by 14pph and is applying this rate to all over 18s, which should encourage younger workers to join the company.

According to a GMB official, Karro Foods, another meat processing company, is struggling to get any agency workers for its seasonal increase in production, and butchers are in very short supply. However, as yet, there are no incentives to encourage butchers to come and work for them.

2 Sisters Food Group in Sandycroft is currently showing a labour shortage of around 15%. According to a Unite official, this “is in part due to Brexit, as lots of migrant workers have returned home, combined with the poor wages on offer at the site, which consequently struggles to attract domestic workers.”

During this year’s pay talks, the union managed to secure a huge increase for the majority of members, which has in part been designed to encourage recruitment and retention, and also to promote training and development into roles that are historically difficult to recruit into. The lowest pay grade increased to £9.50, a 6.38% increase (40% of factory), and ‘manual de-bone’ increased to £12.50, a rise of 31.5% due to the shortage in these skilled workers (20% of factory).

However, while the pay increase may have helped with staff retention, it does not appear as yet to have assisted with recruitment. The union is continuing to work with the employer to attract workers into key roles.

At Bakkavor’s four Park Royal meals manufacturing sites, the GMB negotiated a two year pay deal for 2020/21 in April that included a break roll – meaning wages from break times were incorporated into the hourly rate to make the hourly rate more attractive to newcomers.

However, as part of this deal the company also introduced a lower hourly pay rate for new starters for their first six months. This rate was scrapped after only two months because of difficulties recruiting. Now everyone starts on the base rate or on the four different rates of pay depending on skill level. The deal is as follows:

• first year: National Living Wage plus 5p; 40p on all other grades; and

• second year: 23p on base rate, 18p on all other grades, break roll one 30 minute break

There is currently a huge labour shortage in the hospitality sector that is causing problems for existing staff. Bryan Simpson, of Unite Hospitality Branch, says “we have seen a significant spike in members being denied their overtime (such as chefs at restaurant Six by Nico) and having their tips reduced (Pizza Express reduced waiting staff’s share of tips from 70% to 50%). The sector has also seen “the burgeoning of ultra-short-term employment agencies which offer students as little as 2/3 hour shifts at minimum wage while they take £11 per worker per hour”.

A Bectu official notes that an employers’ association covering theatres is ending double time pay for Bank Holiday and Sunday working and replacing it with single time and the real living wage, which still amounts to an overall loss. The union has instructed members not to accept any hourly increase that affects their overall earnings.

There is some good news though. Examples of hospitality sector employers who have improved wages/conditions for workers include:

• The Atholl Arms Hotel in Dunkeld, which became a full signatory to Unite’s Fair Hospitality Charter, ensuring their workers will receive the real living wage (regardless of age), guaranteed hours, a proactive sexual harassment policy, and 100% of their tips; and

• a series of bars and bed and breakfasts in Aberfeldy, where workers are now receiving the real living wage.

Labour shortages in other sectors

Pharmacies: Pharmacists’ union, the PDA reports that due to shortages and absences among directly-paid staff, employers are willing to close pharmacy sites rather than pay the rates for locum pharmacists. This means the public are denied access to a pharmacist.

Automotive: The Vauxhall Van Plant was on shutdown until 16 August due to labour shortages caused by the pingdemic. Shortages in parts such as condenser chips is also starting to be an issue due to the driver shortage but, as yet, is not a major problem. Cummins in Daventry is also experiencing parts shortages due to labour shortages in the supply chain, and this is affecting production targets.

Local authorities: There are reports of labour shortages of refuse workers and an inability to use agency staff to fill short term vacancies (Uttlesford Council). There is also a shortage of highway operatives due to self-isolating (Ringway Jacobs for Essex County Council) and also in skilled areas such as legal and licensing, and planning/building control (Bassetlaw Council, which has to use agencies) and IT staff (Caerphilly Council).

Prisons: There are shortages due to failures to recruit, low pay and self-isolating.

Incentives in other sectors

• Construction: According to a GMB official from the Midland and East Coast Region, welders are in short supply due to Covid. Twenty-five pounds an hour has been put forward for some sites.

• Health and social care: There are multiple examples of shortages of caring professionals causing cancellations and increased waiting times. In one example, a nurse rep from a London NHS Trust says it is suffering from both unfilled positions and staff members self-isolating. This is causing cancelled visits to patients. The employer is offering £500 if staff recruit someone to the organisation. In another example, Four Seasons Health Care is offering a joining bonus for nurses at two sites of £1,500 each..

• Further Education: The Colchester Institute has been offering £5,000 golden hellos to certain skilled teachers, paid as follows: £3,000 after one month in post, £1,000 after a further 12 months in post, and a final £1,000 after a further 12 months in post.

• Local authorities: Unison reps report that local authorities are offering incentives to social workers but not to other grades where there are shortages.

• Automotive: Stadco Powys, which manufactures parts, recently offered a £100 Amazon voucher if a new employee stayed for a minimum three months.

• Aerospace: Thales, which has shortages in some niche engineering roles, is actively using a referral scheme to encourage staff to suggest suitably skilled applicants from their network of ex-colleagues, friends and family.

This information is copyright to the Labour Research Department (LRD) and may not be reproduced without the permission of the LRD.