Chief Executive's Blog: Getting the Labour Market Right

The government has published its proposals for a post-Brexit immigration system, and I’ve seen friends from related industries, not least UK Hospitality, making the case for why these proposals aren’t going to work for that sector. I wanted to reflect on what they may mean for convenience stores, and how getting labour market policy right depends on understanding productivity in practical business terms … something I’m not sure policy-makers and economic commentators are particularly good at.

Firstly, convenience stores will be affected by changes in who is allowed to come to the UK. Around 2% of colleagues in our sector are non-UK EU nationals, so a small proportion but still 8,000 or so people. Anyone less senior than a store manager is going to be earning less than the £25,600 threshold required to get the maximum points under the system. And, people coming from overseas aren’t, in most cases, coming solely to work in a specific convenience store with a job offer in their back pocket; they’ll come wanting to get one or more jobs, and there’s a decent chance they’ll find a job with one of our members that’s secure, local and flexible to fit around other commitments. Perhaps the more important impacts of this policy might be the knock-on effects of restrictions on other parts of your local labour market. If there are fewer people able and willing to work at a local factory or hotel, might that push up market wages, whether you’re directly employing non-UK EU workers or not? So the new system, as currently cast, will have an impact on our sector, either directly or indirectly.

How do we respond? The stock response from politicians is that businesses have to improve their productivity, and this is where I have a problem for two reasons: one purely practical, and one about how we perceive how businesses are motivated. The practical problem is this: if you operate a small unit (which isn’t necessarily a small business, if it’s a restaurant chain or a convenience store chain, all this applies just as much as to a single site operator) the productivity decisions you make are pretty stark. You had three people on shift in a store, so you try to cut that to two by introducing self-scanning or some other productivity-boosting piece of tech. That’s a big, blunt change, very different from gradual investment and improvement of processes to reduce the number of people in a factory from 2,000 to 1,950 to 1,920 and so on. And there’s a minimum you get to pretty quickly, the reality of which is that glib calls to improve productivity get translated into people working on their own in shops. We should discuss these issues and we should push for productivity gains, but those debates have to take place in the real world not on a spreadsheet. They should also take place with a view to what the alternatives to current employment models for our sector actually are: more gig economy jobs that are the opposite of secure, and where flexibility isn’t usually two-sided.

Then there’s my second objection to politicians spouting generalities on the need to improve productivity: businesses are desperate to improve productivity not because it’s a national political agenda but because, wait for it, that’s how they make any money. Of the thousands of business owners I deal with, I don’t know one who isn’t actively looking at how to cut costs including staff hours, and who isn’t trying to grow sales and margin. One thing that won’t help our members to achieve this is them being lectured at by people who aren’t bearing the consequences of these tough business decisions.

Perhaps it’s appropriate that I’m writing this just after we’ve announced Matthew Taylor, interim Director of the government’s Labour Market Enforcement body and author of some excellent reports on the future of jobs in retail, as a speaker at ACS’ Summit20 on 31 March where he’ll be speaking in a session called Colleagues of the Future. I hope we can continue this debate there, and that we stay grounded in the real world of business decision-making in a changing labour market and world.

This entry was posted by Chloe on Wed, 19/02/2020 - 15:51