Rurality
Summary
The Inquiry considered the unique challenges of rural and island living and how this impacts the experience of fair work in hospitality and found the following:
- Hospitality employers play a significant role in remote rural communities. Accommodation and food services is one of the biggest providers of private sector employment in remote rural areas along with ‘agriculture, forestry and fishing’.
- Rural hospitality employers have many of the same fair work challenges as other hospitality businesses, but they also have a range of added pressures, challenges and costs unique to rural areas.
- There is a general lack of housing in rural areas which reduces the available workforce and prevents people moving to the area for work.
- Tied housing arrangements add significant cost to the employer and come with clear fair work issues for the worker. Having housing which is tied to their job creates issues around security and may act as a barrier to effective voice. The Inquiry heard evidence from workers that tied housing arrangements limit their family life in the longer-term, with rural employers also recognising that tied housing arrangements make it harder to maintain a settled workforce.
- There was a shared desire from both employers and workers to have affordable and stable housing in rural areas.
- There are substantial issues with transport infrastructure including infrequent and fragmented rail, ferry and bus services.
- Rural workers face increased transport costs, with many stating a preference for private car ownership due to the lack of available and reliable public transport.
- There is a lack of reliable and affordable childcare which is further compounded by transport infrastructure issues. Lack of childcare options particularly impact the career opportunities of women.
- Training in rural areas can also be challenging. Employers and/or workers can face increased costs due to transport issues and the additional time away from the business. Online training can also be impacted by connectivity issues brought about by poor broadband service.
Understanding the Rural Economy
The Scottish Government defines rural as ‘Accessible rural: those with a less than 30 minute drive time to the nearest settlement with a population of 10,000 or more’ and ‘Remote rural: those with a greater than 30 minute drive time to the nearest settlement with a population of 10,000 or more’. These definitions form part of the Scottish Government Urban Rural Classification (Scottish Government, 2021).
In Scotland in 2023, there were 3,240 rural accommodation and food services businesses and 11,690 urban businesses. Accommodation and food service businesses employed, 39,000 people in rural areas and 177,000 people in urban areas in 2022 (Business Register and Employment Survey, 2023). The accommodation and food services sector has a much larger share of private sector employment in remote rural areas (17.9%) compared to accessible rural areas (10.1%) and the rest of Scotland (9.9%) making it, along with ‘agriculture, forestry and fishing’ and ‘wholesale, retail and repair’ one of the largest sources of private sector jobs in rural Scotland (Scottish Government, 2023). This can be seen in Figure 29.
Source: Businesses in Scotland, 2023. Scottish Government
Note: Proportions calculated using rounded data.
In rural Scotland, small businesses are prevalent. In 2023, 5.1% of rural businesses in Scotland had 20 or more employees, compared with 8.2% of businesses in urban areas (Scottish Government, 2023). In addition, 69% of businesses, of all sizes, interviewed in the Highlands and Islands Enterprise Business Panel would describe themselves as family owned (Highlands and Islands Enterprise, 2023).
Source: Businesses in Scotland, 2023. Scottish Government
Note: Proportions calculated using rounded data.
The cost of living in rural Scotland can be significantly higher than the rest of Scotland due to the increased cost of transporting goods and services to more remote locations. For example, weekly food costs for those living in remote rural mainland and Island areas were higher than in urban UK areas. This can be seen in Table 11.
| Household | Urban UK | Remote rural mainland | Island |
|---|---|---|---|
| Couple +2 | £112.43 | £117.08 | £126.70 |
| Working age single | £49.69 | £50.60 | £52.06 |
| Working age couple | £83.13 | £84.64 | £87.06 |
| Pensioner single | £47.10 | £48.30 | £51.97 |
| Pensioner couple | £75.25 | £77.04 | £79.57 |
In 2022, 32% of people working in remote rural areas were working on a part time basis. This fell to 26% in accessible rural and Scotland as a whole. Women tended to be more likely to work part time in both remote rural areas (47% compared with 15% of men) and in accessible rural areas (41% compared with 13% of men) (Annual Population Survey, 2022). The prevalence of workers holding second or multiple jobs is significantly higher in rural economies. In 2022, 7% of those in employment in remote rural areas, and 4% in accessible rural areas, had a second job. This is compared with 4% of employed people in the rest of Scotland. In all incidences, the number of women holding second jobs was proportionately higher than men - with 8% of women and 6% of men holding second jobs in remote rural communities, and 4% of women and 3% of men in accessible rural communities in 2022 (Scottish Government, 2023).
Key Fair Work Issues in Rural Areas
Rural hospitality employers have many of the same fair work challenges as other hospitality businesses, but they also have a range of added pressures, challenges and costs that are unique to employers in rural areas. Notably, one of the greatest concerns to businesses is the recruitment and retention of suitable workers in rural areas.
Added to this Brexit has had a significant impact on recruitment in hospitality in general, and on hospitality businesses in rural areas in particular. The hospitality sector experienced one of the largest losses of EU employees after Brexit. The Inquiry also heard from some employers, particularly those based in rural areas, that changes in the UK immigration policy had created further challenges in recruiting staff. Added to this, an Ipsos Mori survey conducted in 2022 in the Highlands and Islands reported that 47% of young people aged 16-29 said that they only plan to stay in their local area for five years or less (Highlands and Islands Enterprise, 2022). This is a clear example of the potential de-population in rural areas affecting the labour market.
Areas of focus further outlined below also impact on the successful recruitment and retention of workers to rural hospitality businesses and include the affordability and availability of housing, access to childcare, and poor transport links with connectivity to the islands being particularly challenging.
Transport
A key challenge facing hospitality businesses in Scotland’s rural and island settings stems from issues with the transport network in these areas, which impact both the availability of workers and business operating costs.
The Inquiry heard from a range of employers on the impact poor transport infrastructure is having on their business. For some hospitality employers in rural areas, their business may be less accessible for customers who want to visit for a shorter stay. Additionally, visiting hospitality businesses in rural areas may be less appealing to customers due to the real or perceived risk that their stay may have to be extended and therefore cost more as a result of the unreliability of the transport network (e.g. ferry cancellations).
Issues with the transport network may contribute to customers perceptions of Scotland as a tourist destination – the Inquiry heard from employer bodies in the industry that Scotland is already regarded as an ‘expensive’ location for holidays. This puts pressure on rural hospitality businesses who reported having to strike a balance between being competitive in pricing, managing business costs (which are higher in rural locations compared to urban locations), and continuing to invest in their staff.
Those with island-based businesses reported experiencing economic and community hardship which they felt was a result of ongoing transport disruption, particularly with the ferry network, which faces capacity issues, breakdowns and weather-related disruption. The Centre for Economics and Business Research report (2022) on the socio-economic impact of CalMac ferry services outlined the impact of ferry unreliability on rural communities in Scotland. Key issues highlighted included increased cost of doing business on the islands relative to the mainland; difficulty in attracting and retaining workers; monetary costs faced by households (missing work, having to stock-pile food) and de-population (poor reliability inducing people to move from the islands) (Centre for Economics and Business Research, 2022).
The FWC Survey of Hospitality Workers and Businesses (2024) asked employers about issues affecting their business. Comments from rural employers included:
“Staffing in a rural community is difficult with the need for personal transport (public transport is ineffective and sporadic) being crucial. ”
(Hospitality Employer)
“Island and transport infrastructure problems which are outwith our control. The unreliable ferry service which lacks capacity at key times. Severe lack of affordable housing causing high staff turnover and increased costs to businesses in providing live in accommodation. Falling working age population as workers can’t find affordable accommodation and are leaving the island. A public transport system which does not support the needs of island workers commuting village to village to village for work. ”
(Hospitality Employer)
(JRS, 2024)
“Island inequality. Poor transportation, telecoms, housing; yet we are expected to pay mainland taxes and more as we are surcharged by all suppliers! ”
(Hospitality Employer)
“Island lacks transport (ferries are a disaster), lacks broadband capability. Higher costs for all incoming food/drink etc. No housing available for staff. No apprenticeships can be delivered on island. We are absolutely neglected by government who seems hell bent on destroying the island economies! ”
(Hospitality Employer)
(JRS, 2024)
Results from the 2022 Scottish Household Survey show that satisfaction with public transport is lowest in rural areas and that adults in Scotland’s rural areas tend to spend more on transport costs per month. For example, when asked how much they spent on fuel in the last month, adults living in rural areas reported spending £134, whereas adults living in urban areas reported spending £84 (Transport and Travel in Scotland, 2022). This echoes findings from the Inquiry which outlined that most rural workers rely on a personal vehicle to travel as public transport in rural areas can be unreliable, with late-night services often limited. This has a profound impact on hospitality shift workers and may impact their ability to accept work in rural locations. Low wages further compound this issue, and owning/running a car is cost prohibitive for many:
“I mean, because it’s an island, it’s the most expensive, it’s more expensive, like fuel for a litre is two pound thirteen. ”
(Lizzie, 23, waitress, hotel resort on island)
(Stockland et al, 2023)
Over the course of the Inquiry, the Convention heard from a number of employers who already provide transport for employees late at night, and who recognised the merits in ensuring their workers’ safety in this way. The Inquiry noted that rural employers were more likely to provide transport for workers at all times of day, either due to a lack of public transport or the difficulties associated with matching shift times to public transport scheduling in rural areas.
Housing
The availability of housing in rural and island areas is a key barrier for local families and young people deciding to settle in rural areas. To support recruitment, many rural employers offer housing as part of the job contract. This can help ensure that workers have somewhere to live which is within easy reach of the place of work. Often this accommodation can be cheaper than renting further from the place of employment which would also incur additional transport costs. The qualitative investigation into the experiences of workers in the hospitality sector in Scotland showed that hospitality workers in rural or island locations reported particular challenges. In particular, they talked about an inability to find affordable accommodation, which meant they often had to either commute long distances or live in staff accommodation, both of which could detrimentally impact on their family and social lives outside work (Stockland et al, 2023). The following comments provide some examples of the impacts that the cost and availability of housing has on workers in rural areas:
“I tried to find a flat to rent but because [the island] is really literally lives on tourism, there is no flat to rent for a long term, just on a touristy price, and I cannot pay £50, £60, £70 a day... So actually I wasn’t able to find one single, not even like a room share or a flat share, nothing. ”
(Tímea, 45, chef in a hotel, rural location)
“We’ve had a look [at buying a place] and just on the island, it’s just, it’s abysmal, I thought where we lived was bad, but there’s nothing. Some of the chefs that [my partner’s] been speaking to, have been here for three years and they still can’t get a house. ”
(Lizzie, 23, waitress, hotel resort on island)
(Stockland et al, 2023)
Workers whose housing is part of their employment face additional vulnerabilities when it comes to addressing any issues they might have with their employer for fear of losing, not just their job, but also their home. These factors also mean that workers were more likely to see their jobs as temporary as they felt they would be unable to settle in the area in the long-term (Stockland et al, 2023).
The Inquiry also heard from rural employers who felt that, along with access to transport, a lack of affordable housing was the largest single driver of the workforce issues in the rural economy. They reported that their businesses cannot operate to capacity without an appropriately sized team, which cannot be facilitated without accommodation. In addition, the cost to the employer of providing accommodation can have a significant impact on profitability and business development. Rural employers providing evidence to the Inquiry expressed concerns about their ability to meet other business priorities, like payment of the Real Living Wage, investment in ongoing training for staff, and investment in refurbishment and maintenance. Rural employers also highlighted that these barriers to recruitment often pushed up wages so as to incentivise workers to accept jobs in remote and rural areas.
Evidence to the Inquiry from both employers and workers highlighted a clear shared desire to have more access to affordable and stable housing in rural areas.
Case Study: Arran Development Trust, Isle of Arran Fair work issue: Accommodation for workers Activity: Arran lacks affordable housing options, meaning workers may be unable to relocate to the island, an issue which is exacerbated by high proportions of second and empty homes on Arran. Businesses on the island see this as the biggest single driver of staffing shortages they are experiencing.
To help address this, the Arran Development Trust (ADT) are building homes on the island to rent to workers, and hope to offer a minimum of 200 homes to people, thanks to a mixture of public and private financing (including £1.5m from the Rural & Islands Housing Fund and £2.1m from Crowdproperty Finance).
The ADT are also planning to construct two- and three-bed rental properties specifically for workers (in the identified key sectors of health and social care, education, local authority and hospitality).
Impact: The ADT’s first 18 homes, at the Rowarden affordable housing development in Lamlash, Arran, are under construction and will be ready for allocation by the end of summer 2024. It is hoped that this will help remove this key barrier to recruitment and retention of staff on the island.
Arran Development Trust will be working in partnership with North Ayrshire Council to identify people from the housing register for the new homes, as well as using the Arran Local Lettings Initiative, which prioritises homes for people already resident on Arran, but in unsuitable or unaffordable housing.
Undertaking a building project of this scale has been a challenging process for the ADT due to a range of factors, such as the additional costs of building on an island (which ADT estimates to add at least 40-50% compared to mainland construction costs), as well as the unreliability of the ferry network, which has resulted in significant delays to the project, in turn increasing costs.
Source: North Ayrshire Council (2023), Strategic Housing Investment Plan 2023 - 2028 Arran Development Trust (2023), Input into Arran Affordable Housing Task Force
Childcare
Childcare provision for those working in hospitality can be challenging as the seasonal nature of work in the industry and the reliance on shift work often results in workers’ need for childcare fluctuating throughout the year. Also, the majority of childcare services do not align with the working hours of hospitality workers who regularly work in the evenings and at weekends.
In rural areas, there are added challenges. For children under 5 years old, research showed that most children are driven to rural childcare services, with journeys varying from 15 minutes to an hour. In many cases, public transport was not seen as adequate, with poor accessibility, particularly in winter if several forms of transport had to be used to access a childcare provider. Further, there is a lack of choice of childcare in rural areas, particularly for children aged 0-3 years, resulting in many parents relying on informal childcare particularly from family (Scottish Government, 2022).
For school age childcare offered in rural and island areas, research showed many parents thought there were gaps in services which can negatively impact their existing and potential employment. Many parents highlighted that limited transport along with the opening times of some services did not align with their working hours, creating challenges to accessing childcare and maintaining employment. The cost of childcare was also a barrier to many parents, with some parents financially worse off working, again resulting in the use of informal childcare, particularly from family (Scottish Government, 2022).
This echoes findings from the qualitative study carried out by Stockland et al, where issues relating to rural childcare for workers were highlighted:
“The only nursery in [our town], is three plus and [my daughter] is only one and a half, so, I can’t really work during the day anyway… We don’t have family here or anything and we can’t afford to have someone come to watch her, because it would cost the same as what I would earn, it would just be silly. ”
(Vicki, 28, bartender in a small town in Perthshire)
“There’s only so much I can do because I can’t be there the whole time. I’m a single mum. So I don’t have people to look after my child in the evening, so this is a bit tricky. I can only get childcare from 8 in the morning […] Unfortunately there is a big lack of childcare here as it is, lots of people have trouble trying to find childcare and child minders, nurseries, there’s just not enough for everybody. ”
(Ellen, 40, office supervisor and manager in a hotel on an island)
(Stockland et al, 2023)
Seasonality
It is difficult to quantify the impact of seasonality in the rural hospitality sector. A significant proportion of the hospitality industry in Scotland will experience seasonal fluctuations in consumer demand. Some establishments may close entirely during the ‘off-season’, while others may keep just a minimal workforce. Workers in these settings may be offered seasonal contracts (i.e. a new contract starting and terminating with each season) or reduced hours during the off-season.
During the Inquiry, employers reported the impact of seasonality as especially challenging for those located in rural or island locations. Written evidence to the Inquiry from an island employer stated that issues with transport further impacted visitor numbers in the winter months, with many businesses now choosing to close. Further written evidence submitted to the Inquiry by three rural businesses reported that lack of visitors is making it harder than ever for employers to offer staff frequent and reliable hours.
Research has identified a range of impacts on workers due to seasonality, including a lack of opportunities for career progression and development in seasonal establishments; a need to provide accommodation for incoming workers in areas where housing costs are high and supply limited; a loss of accumulated skills at the end of the season; and the disadvantage facing seasonal workers when seeking loans etc. However, the same research also noted that seasonal employment can be a good opportunity for certain individuals who may face challenges joining the labour market, such as students and younger workers (Baum, Duncan, & Forsyth, 2021).
Training
When undertaking training and development, the additional travel costs for rural businesses make in-person training more expensive and requires staff to have longer periods away from the business. In addition to this, the distance from training establishments can reduce the pool of staff willing and able to work in remote locations when undertaking placements which can make it more difficult to attract young hospitality professionals to rural businesses.
The issue of remote training is further complicated by issues around broadband connectivity in rural locations. Figure 31 details the findings of research undertaken on the main barriers to accessing training in the Highlands and Islands.
Source: Highlands and Islands Enterprise, 2022
Case study: Highlands and Islands Enterprise (HIE) Fair work practice: Support and resources Activity: HIE works with communities, enterprises and partners to help the Highlands and Islands region grow and progress, whilst driving fair work and net zero practices.
Fair work conditionality plays a central role. Any organisation applying for grant funding with HIE must comply with fair work conditions which include: paying the Real Living Wage, having a flexible working policy, and being able to demonstrate support for workforce development and employee engagement.
HIE also provides support and resources to help hospitality businesses in the region improve their fair work practices. In 2022, the agency held focus groups with hospitality and tourism businesses to gauge awareness of fair work and the Fair Work Framework, and to understand any barriers or misconceptions businesses may have. Based on this consultation, HIE produced the guide ‘Fair Work: An introduction for tourism employers in the Highlands and Islands’ which provides friendly and relatable guidance for businesses on how to introduce fair work practices, with case studies from across the Highlands and Islands.
Following this, HIE rolled out a fair work programme to provide tailored and specific support to hospitality and tourism businesses. This included workshops, one-to-one sessions and customised reports for businesses.
Impact: As set out through several case studies on HIE’s website, a range of businesses consistently report positive impacts as a result of improving their fair work practices. Benefits include improved staff recruitment and retention rates which are particularly important in the Highlands and Islands where low population and workforce availability are key challenges.
In addition, businesses recognise that being a fair work employer generates bottom-line benefits, with higher levels of staff retention and morale driving improved productivity.
Steps Already Taken
The ingrained and multi-faceted nature of the issues highlight the interaction between fair work outcomes, the functioning of the economy and underpinning infrastructure like housing, transport and childcare. To make sustained economic progress in rural areas, issues of fair work and these ingrained challenges will both need to be addressed and it is difficult to separate one from the other.
Significant focus already exists on improving the underpinning infrastructure in rural areas. Partnership working between the Scottish Government, Local Authorities and Enterprise Agencies has sought to tackle these deep-rooted and complex issues. Interventions can be seen through the work of both the Convention of the Highlands and Islands and the Convention of South of Scotland, the National Transport Strategy (NTS) (Transport Scotland), and through the Reaching 100% Superfast Broadband policy. Added to this, the Scottish Government has also committed, in their 2024-25 budget, to offer a new 100% relief on non-domestic rates in 2024-25 for hospitality businesses located on islands.
Conclusion
In Scotland, there is a strong reliance on hospitality and tourism in many remote rural areas. Rural businesses face many of the same fair work issues as their more urban counterparts but there are significant additional issues facing both employers and workers in rural areas which have knock on impacts on fair work. Addressing challenges on transport, housing, childcare and connectivity is important work, that requires investment and joint working across a range of public agencies. While significant work is already ongoing, it is important to recognise that making progress on these issues will also help to support improved fair work outcomes in rural areas.