Business body report highlights staffing crisis in the Highlands
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A new FSB Highlands and Islands tourism survey finds that one in 10 businesses is barely staying afloat, a quarter are worried about survival, and a half of employers are understaffed.
The report based on the results of a recent survey of local tourism and hospitality businesses finds that the eagerly anticipated staycation boom did not take place as soon as travel restrictions were lifted.
The FSB branch said this has left four in 10 businesses struggling to generate sales and profits (42 per cent), one in ten barely staying afloat (9 per cent), and a quarter feeling pessimistic about their chances of surviving until 2022 (25 per cent).
The FSB Highlands and Islands survey, conducted between May 25 and June 4, focused on tourism and hospitality businesses within the Highlands and Islands Enterprise area – Shetland, Orkney, Outer Hebrides, Highland, Moray, Argyll and Arran – and produced 290 responses.
There is no breakdown available for Badenoch and Strathspey from the FSB.
A wide range of worries were cited by business operators, chief among them being keeping up to date with government rules and regulations (64 per cent).
However, four in 10 were worried about having too few customers (41 per cent) and four in ten were worried about travel restrictions (40 per cent).
But arguably the most serious ongoing worry is that almost a half of employers did not have enough staff to meet their needs (45 per cent).
And while a half of these (50 per cent) were struggling to open as normal and get by, the other half had been forced to cut services, opening times or both.
A breakdown of the results within the HIE area reveals that the West was generally performing better than the East, the weakest performer was Shetland, and the best performer of all was the Northern Highlands – the area covered by the North Coast 500 (NC500).
David Richardson, Federation of Small Businesses’ Highlands and Islands Development Manager, said: “While the ambition has always been for the Highlands and Islands to have a truly mixed economy, the fact is that most of this vast region is dependent, directly and indirectly, on tourism.
"It sustains jobs and communities, and without its rich array of businesses and services the quality of life that we all enjoy would be vastly diminished.
"Tourism is everyone’s business, and it is in all our interests that it succeeds.
“The fact that so many businesses In the Inverness, Moray, Badenoch and Strathspey area described themselves as struggling is a matter of grave concern, and it’s no wonder that a quarter fear that they might not survive until 2022.
"This is the time of year when these lynchpin businesses must build up the cash reserves needed to carry them through the long winter, undertake essential repairs and refurbishment, and start paying off any debts resulting from Covid loans.
"They simply cannot afford to be operating on ‘slow’.
"The lack of customers, especially overseas visitors, is a real worry and the sooner travel restrictions are lifted the better."
In the Inverness, Moray, Badenoch and Strathspey area, half of the businesses described themselves as doing badly (48 per cent), as against four in 10 in the region as a whole (42 per cent).
As a result, businesses in this area were generally slightly more worried than their counterparts elsewhere about a wide range of issues, and especially about their low turnovers (54 per cent were concerned compared to 41 per cent across the whole region).
Staffing shortages were also highlighted, though the shortage in the Inverness, Moray, Badenoch and Strathspey area was less pronounced than elsewhere (34 per cent short staffed in the area; 45 per across the region.
Mr Richardson said: "Whether this is down to the nature of the area as a whole or to the sample size is not clear, but the problems faced by many businesses in Badenoch and Strathspey, and by hotels and restaurants in general, are well known.
"Employers were trying to recruit staff from wherever they could get them, and two in 10 (18 per cent) had increased wages in bids to attract and retain staff.
"Going forward, three in ten (29 per cent) of tourism and hospitality businesses in the Inverness, Moray, Badenoch and Strathspey area were pessimistic about their chances of surviving until 2022, as against a quarter across the region as a whole (25 per cent)."
The FSB report calls on the Scottish Government to commit to a range of actions, including withdrawing the need for physical distancing and self-isolation once most of the adult population is fully vaccinated.
It also calls on the UK Government to pilot a remote visa for employers in the Highlands and Islands.
Mr Richardson said: “However, the concern that should be exercising minds most is staffing. Staff shortages have been a growing problem for years, even with a plentiful supply of EU workers but now the situation is becoming critical.
"Hard-pressed businesses are struggling, and in many cases failing, to recruit people from wherever they can get them - locally, from the rest of the UK, or overseas – and four in 10 have increased pay rates in a bid to improve recruitment and retention.
"Sadly, however, staffing shortages in tourism and hospitality are a national and international problem rather than something purely local, and solving the problem in the Highlands and Islands is going to be far from easy.
“It is the longer-term damage caused by these staff shortages that is so worrying. The Highlands and Islands is renowned for its world-class scenery, natural and cultural heritage and activities, but being a world-class holiday destination means providing world-class service and outstanding value for money too.
"Poor customer service because staff are over-stretched, or no service at all because businesses are closing early or cutting back on what they provide, don’t just impact on visitor satisfaction and spend now – they impact on the propensity of these visitors to return and recommend the Highlands to others. Long-term damage can result – damage that affects us all.
“We must make it as easy as possible for businesses to take on staff, including much-needed migrant workers from overseas, and we must solve the accommodation issue with a mixture of affordable housing for residents and rooms for seasonal staff.
"We are encouraging the idea of shared accommodation blocks in key settlements akin to university halls of residence.”
The full report can be found here
FSB Scotland’s report makes six key recommendations:
It calls on the Scottish Government to:
* Withdraw the need for physical distancing and self-isolation once most of the adult population is fully vaccinated.
* Enable much-needed international travel by the end of the summer.
* Significantly improve the communication of government rules and regulations, thereby alleviating the main concern for the business community.
* Provide ongoing financial support to struggling tourism and hospitality businesses in the area – as, where and when required.
* Better connect job creation schemes like the Young Person’s Guarantee to acute staffing shortages experienced by businesses in different areas. Highland Council’s Highland Employment Recruitment Offer (HERO fund) is a good example of what can be achieved.
Also, in recognition of the fact that the post-Brexit immigration system has made it prohibitively expensive and overly complex for smaller businesses to access migrant workers – a particular issue for the HIE area – the FSB recommends that the UK Government should:
* Adopt the Migration Advisory Committee’s 2020 recommendation and pilot a remote visa for the HIE area.