How are employers in warehousing and food manufacturing dealing with ongoing workforce pressures?

While the election debates have focused on how to bring down net migration, the reality is that the UK is struggling with a shortage of workers. This shortage continues to stay above pre-pandemic and pre-Brexit levels, with 900,000 unfilled jobs across the economy according to the latest statistics from the Institute for Employment Studies.

In this context, our project “Labour Mobility in Transition” (funded by the Economic and Social Research Council) has been investigating how employers in four key sectors of the UK economy that historically rely on migrant labour (food manufacturing, warehousing, hospitality and adult social care) are responding to workforce pressures.

This blog post focuses on the emerging findings of our recent workshop held on the 7th June 2024 with key industry and policy stakeholders on responses to ongoing worker shortages, challenges, best practices, and common trends in warehousing and food manufacturing. The event included representatives from the Trades Union Congress (TUC) and the Bakers, Food and Allied Workers Union (BFAWU), employers from the logistics and warehousing sector, employer federations, skill bodies, and local authority representatives.

Since the re-opening of the economy post-Covid and in the context of the ongoing cost-of-living crisis, employers report that they are resorting to a combination of three key strategies:

1. Diversifying workforce and considering more flexible time arrangements to attract new workers with multiple commitments (e.g. parents; elder, international students with limited right to work) and introducing new worker benefits
2. Adapting recruitment and retention strategies
3. Using technology to increase efficiency and reduce reliance on labour in order to stabilise operations.

Our workplace interviews with management in warehousing also indicated an increase in the use of labour intermediaries such as temporary agencies to respond to the high turnover of staff and to expand the supply of workers.

Among the barriers identified were the perception of jobs in these sectors as low-skilled, and problems with the pipeline and existing training schemes.

Diversifying the supply of labour

Before Brexit, both the warehousing and food manufacturing sector relied, to some degree, on labour from the expanded EU, especially Eastern Europe. The freedom of movement of workers facilitated access to this mobile pool of labour. With post-Brexit immigration restrictions, this worker mobility is no longer possible because many of the jobs facing labour shortages in these sectors are excluded from the Skilled Worker visa route, limiting employer capacity to recruit from abroad.

Our national survey of 1,6000 employers across the four sectors shows that only about 5% are sponsoring visas for workers from outside the UK. As a result, employers are focusing more on hiring workers already in the UK or using specific six-month seasonal visas, like those for horticulture or poultry workers. These seasonal visas have been extended for another five years, until 2029, but are limited to a small number of specific jobs.

To address the gap in the available pool of workers, some employers are looking to diversify their workforce by seeking to attract workers from previously underrepresented groups. Some employers are making the workplace more inclusive through offering more flexible working patterns that would fit around caring responsibilities.  They are also attracting international students by offering limited-hour contracts that comply with visa restrictions.

Recently, diversification strategies have also shifted towards tailoring recruitment to attract people living with disabilities or health issues, and other groups facing barriers to access the labour market.

Employer or sector-led initiatives aimed at diversifying workforces include working with charities to help support people into long-term employment.

There are also initiatives such as “Supported Internships” - a national programme to promote labour market access for jobseekers experiencing different types of barriers, whereby local authorities can direct businesses to training organisations who are running Supported Internships in their area.

Making the sectors more attractive and increasing retention

Key issues that contribute to workforce pressures in the two sectors is their perceived relative ‘unattractiveness’. Some employers have been able to respond by increasing pay and improving working conditions and upskilling their existing workforce, for example, retraining warehouse operators to become HGV drivers.

Other initiatives and strategies to make the sector more attractive and increase staff retention include providing support around mental health and access to GPs. One of our case studies in warehousing and logistics reported how the company has made an investment into their workforce health by providing a 24-hour GP service for the workers. This also demonstrates how concerned employers are becoming about the impact of a struggling NHS on their workforce wellbeing and productivity, while identifying patterns of privatisation of welfare found in other research.

The discussion with industry representatives (trade unions and employers) at the workshop emphasised how making these sectors more attractive includes changing the perception of what working in the sectors is like. Food manufacturing and warehousing are often talked about as ‘low skilled’ work, but this is a perception that needs de-mystifying: with the widespread use of technology in both sectors, there is a renewed need for skilled staff – engineers, technicians, not to mention HGV drivers.

The participants in the workshop, despite representing different constituencies, agreed that what is meant by “skilled” or “low-skilled” work is a contested issue and that the social or economic value attributed to different type of work(ers) changes according to time and context (for example, it wasn’t too long ago when warehouse, food and delivery workers were called ‘essential’ during the pandemic).  

Challenges with workforce development and apprenticeship programmes

Education and training are essential for developing a workforce with the right skills to meet the demands of an economy that is evolving due to technological advancements, climate shifts, and changing demographics.

However, with schools operating with reduced budgets and increased teacher turnover, many  simply do not have the time or capacity to shape career perceptions or to provide individual career advice and in-depth work experience. As such, our workshop participants perceived that parents have become the main source of careers advice for young people. The skills providers also noted that with university fees at over £9,000 a year there has been an increased interest and enrolment for higher and degree apprenticeships.

While the interest in apprenticeships may be increasing, the ability of businesses to take on apprenticeships requires them to have a stable workforce and operational environment. Some businesses that took part in our research reported that due to ongoing workforce pressures, they did not have the capacity to take on apprentices because they were unable to allocate the time needed for training them. This is especially the case for SMEs who have less capacity for contingency measures.

Employers in these sectors also raised concerns about the government’s apprenticeship levy, finding it difficult to use and inflexible. This is especially problematic during workforce shortages when companies can’t afford to have employees in training for extended periods. Many funds from the levy remain unused, indicating a need for reform.

Utilising automation

Another key approach to addressing workforce pressure in both food manufacturing and warehousing is an increased reliance on automation. The use of technology and automation as a substitution for labour has been discussed extensively in the media, and businesses in both warehousing and food manufacturing sectors have reported adapting automation to streamline their operations and improve efficiency, or to make the integration and induction of new workers easier by providing basic training in different languages through online platforms.

While the use of technology has enabled businesses to reduce, to an extent, the reliance on human labour, our participants emphasise how certain work processes and tasks cannot be automated and how businesses will always need workers.

Implementing new technology is not without its challenges. Again, the size and profit margins of a firm matter in terms of its choice to invest in technology: the majority of business in food manufacturing are SMEs, for which the cost of purchasing new technology may be unaffordable (as also found in our national survey of employers). Additionally, most funding for technology and development in food production tends to go to large agribusinesses with whom SMEs are not able to compete and those in the manufacturing sector are often less likely to be eligible for support.

Our research highlights the need for a long-term industrial strategy that involves collaboration between sectors, government departments, unions, and training providers. To tackle the UK’s economic and demographic challenges, influenced by Brexit, Covid-19, and the cost-of-living crisis, this strategy should focus on skill development and retraining, fair recruitment from abroad, and technological innovation.

We will explore these themes further in our upcoming workshops in relation to the other sectors we are investigating. Visit our project webpage to stay updated with future events and findings.