Chronic labour shortage forecast for U.K. food and drink industry post Brexit

hot rolls on an assembly line

As part of a series of in depth articles on the effect of Brexit on various U.K. industries, Willis Towers Watson recently released its insights on the food and drink industry. Brexit has added to mounting concerns over a chronic labour shortage forecast to hit the U.K. food and drink industry over the coming years. The industry is heavily reliant on migrant workers from the E.U. and, without free movement of labour, as many as 25% of the workforce could be lost.

Other key findings:

  • The food & drink industry contains by far the largest manufacturing sector in the U.K. with 400,000 people employed across over 6,600 businesses. About 32% of this workforce are non-U.K. nationals, many from Eastern Europe. A full 98% of seasonal workers in the U.K. originate from the E.U. Given the brisk rate of U.K. workers ageing into retirement, the sector could see a shortfall of 100,000 workers, prompting some companies to change their business model.
  • Manufacturers will be potentially hurt by a possible loss of farming subsidies leading to a lack of ingredients, which could give way to cheap imports. A lower pound is also likely to increase raw material costs for food manufacturers. U.K. farmers received almost 3 billion pounds in direct payments from the E.U. CAP scheme in 2015
  • Given the U.K.’s biggest trading relationship is with the E.U., the devaluation of the pound and access to trade are two big uncertainties that will impact the drinks sector. The E.U. is the biggest supplier of wine to the U.K. with France, Italy and Spain supplying 60% of imported wine, a relationship that could change if it is cheaper or easier for the U.K. to import from countries outside the E.U. Scotch suppliers may lose out on the potential loss of free trade agreements with the E.U.
  • Roughly 18% of U.K.’s beer market is imported and business models could change. However, the U.K. craft beer industry could benefit from a weak pound.
  • 72% of the U.K.’s food and non-alcoholic drinks exports go to the E.U.

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Simon Bridgwater heads up the service of key accounts within the food and drink industry as Practice Leader at Willis Towers Watson and provides thought leadership and insights for the sector. He has over 25 years’ experience in the insurance Industry and works with many leading companies in the sector, both in the U.K. and Europe. Simon has strong links with the insurance market across all key risks in the sector to develop new solutions and more competitive premiums or risk transfer solutions. He works with many market bodies such as BRC Global Standards and the Food & Drink Federation.

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