Hospitality in Scotland

The hospitality industry in Scotland offers business opportunity, jobs and careers, but also a range of fair work challenges. Hospitality businesses range in scale and ownership from micro, sole-trader and family businesses to major multinational corporations. The sector is heterogeneous, delivering a broad range of products and services and catering to a wide variety of markets and customers. While hospitality may not generate large proportions of either Scotland’s GDP or its workforce, it makes a significant contribution to economic activity, particularly in rural areas that would otherwise struggle to attract investment and retain local populations. Crucially, it also contributes to the quality of local community life across Scotland.

The industry has long been characterised by high levels of non-standard employment contracts, underemployment, significant staff turnover (reflecting high part-time and temporary/seasonal employment), and greater use of foreign-born migrant workers and those from minority ethnic backgrounds compared to other sectors.^[2] Employment contracts are diverse, spanning open-ended and full-time contracts through part time to precarious casual and seasonal contracts, including zero hours contracts. Employment is characterised in large part by low pay, precarity, unsocial hours and work patterns. Women, young people, racialized and migrant workers are over-represented in the industry. A recent FAI study of workers in hospitality in Scotland characterises the workforce as younger and mainly female; over half of workers are in households either without dependent children or are single parents.^[3] At industry level, hospitality has the lowest levels of average hourly pay and weekly hours relative to other sectors. There are concerns over issues of sexual harassment in parts of the industry.^[4]

Jobs themselves are diverse and span a wide range of skills. Although skill levels in the sector are mixed, most workers are in elementary occupations. Following a period of growth, the impact of the pandemic and Brexit have led to significant labour and skills shortages in the industry. Most hospitality workers are employed in private sector restaurant, pub or hotel-related businesses, with many in roles where staff behaviours (rather than technical competence) make a substantial difference to customer experience.

For many, hospitality is not an attractive industry: current skill shortages reflect low numbers of applicants with the required skills and not enough people interested in doing low paying jobs with shift working and unsociable hours.^[5] The sector has been one of the hardest hit by the impacts of the Covid-19 pandemic and is likely to be further negatively affected by the current cost of living crisis and ongoing economic uncertainty.

For the industry, skills shortages could stimulate a business model shift geared toward the retention of workers: for example, skill building, flexibility in shifts around school hours and the greater use of older workers – all of which are consistent with fair work practices. In reality, however, rising energy and food costs might mean that fair work may be seen as a threat by employers. Delivering fair work presents several challenges for hospitality and tourism employers, particularly around the Real Living Wage; the issue of tipping; the use of non-standard contracts; underemployment and skills underutilisation; training; careers progression; staff engagement; equality and diversity issues including concerns over sexual harassment; and union recognition.

The research leading to this (and the preceding) report aimed to identify and explore the range of policy levers available in Scotland to encourage and embed a commitment to fair work generally and on specific dimensions, and to examine what levers can be best applied to advance fair work in the hospitality industry and how these might be received by industry stakeholders. The overarching aim of this report is to help inform the deliberations and recommendations of the Fair Work Convention’s Hospitality Inquiry Group.