Worse than Covid: Labour shortages causing havoc for hospo sector

After more than a year of missing out on domestic and international dollars, the hospitality sector says not being able to meet current levels of much-needed demand is soul-destroying. Aimee Shaw reports.

The transtasman and Cook Island travel bubbles should be cause for celebration among businesses, but those operating in the hospitality industry say the bounce-back in business is leaving them “hamstrung” as they struggle to meet demand among labour shortages.

The worker shortage is an issue no restaurant, eatery or cafe is immune from.

As Hospitality NZ chief executive Julie White puts it: the current labour shortage is worse than Covid, lockdowns and the effects of the health crisis itself.

The situation is severe and is only expected to get worse despite the Government recently granting automatic six-month visa extensions for 10,000 people whose working holiday or seasonal employment visas are due to expire before the end of the year.

Under the changes, seasonal workers will also be given open work rights, allowing them to work in sectors other than those for which they got the original visa.

Restaurateur Krishna Botica, director of hospitality group Comensa, which operates Auckland eateries Cafe Hanoi, Xuxu Dumpling Bar, Saan and Ghost Street, says the Government’s hard-nosed approach in shutting the borders to migrant workers meant many in the industry had struggled to survive over the past year.

Staff have gone from working minimum hours (as a result of lockdowns) to being overworked and stressed.

“(They) are starting to physically fall over, as are many of the business owners who are having to work ridiculous hours to make money back but not being able to staff enough so therefore not being able to open.”

Botica says she does not understand why the Government is seeking to “change the nature and culture of employment in New Zealand” at a time when businesses and the economy are still recovering from disruption caused by the pandemic.

“It’s a huge lack of regard for getting your head around business when they say you have to employ more Kiwis. We have 4.9 per cent unemployment, which is fantastic by most accounts, we can’t get Kiwis to apply or even show up for trials, and this is for entry-level jobs, [people] who will need two years of training.

“[The Government] is not supportive of people who want to work in this country and have the skills necessary, where Kiwis are not prepared to do the work.”

Botica worries what the long-term mental health consequences will be for owner-operators.

“The restaurateurs I talk to are trying to figure out whether they are going to be able to sustain this for much longer. The mental health issues are severe, the stress is severe and they have nowhere to turn.”

Pre-Covid, New Zealand’s hospitality industry was made up of between 25-30 per cent of migrant workers. Now, this sits around 15 per cent.

It is estimated the industry is short of up to 15,000 staff. It is facing nationwide shortages of chefs, bartenders, waiters, kitchen hands and maitres de maison – and large chains are not immune from the shortages.

Coffee chain Mojo told the Herald in May that it still had 25 job vacancies, for a wide range of roles it had been looking to fill for months.

About 90 per cent of restaurants in this country are single owner-operator venues.

A recent survey by the Restaurant Association found more than 80 per cent of its members are finding it hard to recruit staff.

Mike Egan, co-owner of Asian fusion restaurants Monsoon Poon, says staffing shortages have got far worse with the passage of time.

Egan, who is also national president of the Restaurant Association, says shortages have become so bad he often finds himself in the kitchen washing dishes and helping out.

“Everyone is suffering from shortages of suitable staff. We’re starting to see reduced hours [throughout the industry] and it’s a shame because business is there and there is a lot demand with places really busy,” Egan told the Herald.

The industry is unable to bring in new temporary workers like travellers and backpackers who used to fill a lot of the roles because the Government sees that sector as low skilled.

The Herald has contacted the office of Immigration Minister Kris Faafoi for comment.

Business owners were pulling out all stops to hire more staff, taking on more students and graduates from hospitality schools, but there were still not enough to fill vacancies, Egan says.

Earlier in the year, celebrity chef Josh Emett put out multiple calls on social media, calling for Kiwi chefs overseas to come home, and at the time was offering to pay part of their airfare back to New Zealand.

Egan – who hasn’t had a full day off in over a month – says the provinces are suffering more than the main cities, finding it even harder to recruit staff.

He says he has got his children helping out in the restaurant and even has ex-staff who now work full time in office jobs helping out on extra busy shifts.

“The numbers aren’t there – there’s just not enough. Ministry of Social Development, if we go to them, they too tell us there is no one on the dole who are qualified chefs to work either.”

New Zealand’s hospitality industry is not on its own around the world in trying to attract staff. Earlier this year Florida seafood restaurant chain Shrimp Basket offered a $31,800 car as a raffle prize for job applicants after advertising unsuccessfully for six months. The car promotion caused a spike in applications but still left more than half the roles vacant across the company’s 20 locations.

Dr Warren Goodsir, head of Auckland University of Technology’s School of Hospitality and Tourism, says cutbacks and redundancies that rocked the sector last year during the lockdowns had forced many working in hospitality to seek employment in other industries.

The pandemic has also made many former hospitality staff rethink their career opportunities.

“We’ve lost a number of employees from the industry and so re-finding them now that there’s a bounce-back with the domestic tourism market picking up – a 135 per cent [increase] on what we have done in the past, and the Australian travel bubble opening up, businesses are finding that these labour shortages are really biting hard.

“Attracting back the people that we have lost from the industry has been problematic,” says Goodsir, adding that there was now a significant opportunity to rebuild the industry.

“Where to from here for these industries? How do they move from what has in the past been reported as a low-skilled, low-wage workforce.

“There’s plenty of opportunity now to rebuild a tourism and hospitality future that is sustainable, that provides good employment and cares for its workers and customers.”

Goodsir says AUT’s Hospitality School is receiving increasing demand from businesses for students to fill roles in the industry.

He says since the onset of Covid-19, there has been a 10 per cent decline in student enrolment numbers into hospitality, tourism and events courses among domestic students.

There was a lot of work to be done to recreate the industry and make it an attractive place for millennials and young Kiwis to work in, through both working conditions and clear career paths.

He believes the industry is too reliant on low-paid international workers but acknowledges that it thrived on diversity, with staff from different cultures and walks of life bringing about experiences sought-after when dining out.

“The tourism and hospitality industries are often the first to feel the impact of recession or a jolt like this but bounce back very quickly. I’m hopeful that it will bounce back to a better position than it was before.”

Hospitality New Zealand’s Julie White says staff shortages had reached critical levels and the industry was reaching breaking point.

“We’re finding the labour shortage is having a greater impact than Covid.”

Prior to the pandemic, the industry didn’t have to look hard to find staff, with temporary workers – often many from Europe on working holidays – looking for regular bar and waiting work. Now, White says, operators are struggling to find workers, let alone skilled workers and, as a result, are working longer hours and juggling more roles to keep operations afloat.

White, like many, believes the Government is naive about what the effects of shutting out migrant workers destined for the industry will be.

“The lack of skilled workers is the straw that has broken the camel’s back, as opposed to [squeezed] margins and productivity,” she says.

With most businesses in the industry being small operators, many of whom have their homes tied to their business as collateral, the shortages will inevitably mean closures and insolvencies, says White.

“I think they are okay with some of our sector closing,” she says. “The Government has made it really clear that they are not opening the border to more migrant workers. Period.”

White says the notion businesses should instead employ more Kiwis to fill vacant roles is redundant as there were not enough Kiwis interested in hospitality jobs.

The industry was also “competing against the Government on its benefit payments”.

Business trading days and operating hours have already started to drop for many of the sector’s 22,000 hospitality businesses, says White.

There are fewer insolvencies and business closures last year as artificial money was pumped into the economy through the wage subsidies, but mass closures this year will be unavoidable, she believes.

“This Government just doesn’t value the sector – it is as simple as that. They’re falling really short, because we make up the country’s vibrancy.”

White says the Government’s approach to labour issues could not be more different from Australia’s, with some states using cash incentives to encourage workers to certain areas in the high season.

Light at the end of the tunnel?

Botica says she sees no end in sight for staffing issues.

She says the industry has found itself in an unfortunate position – experiencing high demand yet unable to capitalise on it as pressures on staffing forces operators to restrict booking capacity and operating hours.

“I don’t know whether it was the bubble opening, but it’s like a light has gone on and people are celebrating. They’re going out with family members that have come back from Australia, there’s more events happening. Every restaurateur I speak to is saying business is back and we’re climbing our way out of our debt that has been incurred by Covid and the lockdowns, but now they can’t open up enough just to maximise on that.”

Botica has been unable to open for three lunch shifts she would like to for her new business Ghost Street, which opened up six weeks ago: “We know we’ve got customers there because they try to come in because we’re down there prepping and we just don’t have enough staff to keep up with it.”

The opening of Ghost Street was planned prior to Covid, and after delaying the opening by seven months, she was legally obliged to get it up and running.

Botica, who works between 60 and 70 hours each week compared to 45 to 50 pre-pandemic, has been forced to get creative with operations amid staffing shortages. This includes menus where the customer fills out a form to place their order, and only serving pre-mix cocktails as bartenders can’t be found for the job.

“We’ll be limiting our hours because if we can’t find the staff we can’t kill ourselves trying to keep them open.”

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