Carolina Monteiro IB1

Commentary 1
Title of the article: Pubs and restaurants: Staff shortages threaten Welsh hospitality industry
Source of the article: BBC news www.bbc.com/news/uk-wales-57105976 (Accessed 25
May 2021.)
Date the article was published: 13 May 2021
Date the commentary was written: 25 May 2021
Word count of the commentary:
Unit of the syllabus to which the article relates: Microeconomics
Key concept being used: Scarcity

Article
Pubs, cafes and restaurants are all waiting to welcome customers back inside on
Monday - but staff shortages mean some are struggling to reopen.

One leading Welsh recruitment firm said the sector was in crisis.

"I have never seen anything like this in 35 years in the industry," said Simon James of
Atlantic resource recruitment agency .

Even one of Wales' Michelin star restaurants has turned to social media in a bid to recruit a
new head chef.

Shaun Hill, chef patron at The Walnut Tree near Abergavenny in Monmouthshire, said he
was opening - but still had gaps in the kitchen: "I'll need a new head chef to work with me if
anyone has any ideas," he tweeted.

The online agency Indeed said it was inundated with businesses who need staff. Most hard to
find have been chefs, with salaries of more than £40,000 on offer in the Cardiff area.
Asador, a Spanish restaurant in the centre of Cardiff, will not be opening as it cannot get
enough staff, with other team members helping out in sister restaurants.
Natalie Isaac, director of its bar and restaurant firm 44 Group, said the situation was
"horrendous".

She said they are trying to open three bars but still cannot find the staff they need.
It is not only affecting bars and restaurants. The Imperial Hotel in the Conwy resort town of
Llandudno usually employs 100 people, but only has 65 staff ready to reopen on Monday.

The trade body that represents businesses from hotels to fish and chip shops, UKHospitality
Cymru, said the crisis threatens Wales' economic recovery.

Before the pandemic, more than 106,400 people worked in the industry in Wales and it
spreads further employment into communities and businesses that supply it - with Wales'
food and drink supply chain worth £22bn in 2019.

Simon James, of Atlantic, said that was making even unemployed people wary of taking up a
job in the sector, in case they lost it again and then had to wait for benefit claims again.
At the same time, he said that he had spoken to many skilled chefs who had been working in
different jobs during lockdown, and were now staying in those industries because work-life
balance was better.

"I know of a really respected top chef who has been working as a carpenter and is staying
with that rather than returning to the kitchen," he said.

He said there was then the added complication of Brexit, in a sector that had traditionally
relied heavily on staff from other EU nations.

Mr James said many had returned to their families during lockdown and no longer wanted to
work in Wales because Brexit had made it more difficult.

City centre bars in Wales' university cities and towns have always been reliant on students,
not just for custom but also serving customers. But Covid has meant many students have
simply have remained at home this year, especially those studying in Wales from overseas.
Commentary

This article mainly focuses on how a “shortage” of “labour” has affected the hospitality
industry in Wales. After the lockdown caused by the COVID-19 pandemic, pubs, cafes,
restaurants and even some hotels looked forward to reopening, but the sudden lack of staff
made it difficult. A shortage is a situation that happens when the demand for a product or
service exceeds the quantity currently being supplied, causing that market to be in
disequilibrium. Labour is the factor of production that involves all of the human resources
used when producing a good or service, including both physical and mental contribution of
the workforce.

Figure 1: Graph representing the initial stage of the pandemic: the lockdown.

In figure 1, The D1 and D2 labeled curves represent the demand for workers, whilst the S1 and
S2 labeled curves represent the supply of workers available in the market.
Initially, the D1 and S1 curves intersected at point A, and the market was in equilibrium. This
meant that the demand and the supply of workers was equal at W0, in this case, representing
the wages of the workers. We can observe that, with the beginning of lockdown,
establishments started closing and therefore needing less workers. This caused the demand
curve for workers D1 to shrink, shifting to the left and becoming D2, because for the same
wage W0, a lower quantity of workers was needed (point B): since the hospitality businesses
were being forced to close, most workers and their labour were redundant. This situation
provoked an increase in unemployment and people now had to actively search for work in
other industries. Once workers found alternative jobs and as mentioned in the article, “better
life-work balance”, unemployment decreased again. However, the supply of workers
available in the hospitality industry decreased, causing the supply curve to shrink and shift to
the left, from S1 to S2, because for the same wage

This model represents what is described in the article, as, in Wales, after the lockdown caused
by the current pandemic, pubs, bars, restaurants and even some hotels are struggling to
reopen due to staff shortages. As explained in the article, the workers that were in the
industry before temporarily lost their jobs during lockdown since all establishments had to
remain closed to the public. It was stated that this made them change the industry they were
working on and were “now staying in those industries because work-life balance was better.”
For the same salary, there is still the same quantity of workers demanded in order to reopen,
however, because many workers left the industry, there is a lesser quantity supplied.
Therefore, a staff shortage was originated and now, not only these establishments are unable
to reopen, but also the new businesses eventually trying to start “cannot find the staff they
need”.

Figure 2: Production Possibility Frontier for Service X and Service Y

In figure 2, Service X and Service Y represent two services in the hospitality industry, whilst
the green curve represents a Production Possibility Frontier for the two services. In this
model, the amount of both services that can be simultaneously produced based on the factors
of production available is represented. Whilst in point A it is illustrated the most efficient
point for production, as all factors of production are being used, point B represents an
inefficient situation when the factors of production available are not all being used to their
full potential. Point C, however, represents an output level that, given the current
circumstances, is unavailable, as the quantity and quality of the factors of production
available are lower than necessary. This perfectly represents scarcity, as there are not enough
resources to provide the desired quantity of both services.
It is exactly point C that best represents what is happening in the hospitality industry in
Wales, according to the chosen article. Even though all of these businesses want to reopen,
there isn’t enough labour available for all of them. Workers are scarce in the industry and,
unless there is a shift of the PPF curve to the right due to an increase in quantity and/or
quality of the factors of production, it is not possible to produce at point C.

In order to resolve this issue, measures to incentivize and recruit more qualified workers into
the industry must be taken. As a first step, employers from establishments who are having
difficulties hiring must get creative with recruitment. Like it was briefly mentioned in the
article that Shaun Hill, a chef, promoted a job opening via social media, on twitter, other
employers should as well promote these openings as much as they can by promoting them
online, working with local staffing agencies and advertising them in both local schools and
community centers (Krook, N.D.). Because the market is extremely competitive, these job
offers must be as appealing as possible with characteristics that make them stand out from
their competitors’ offers. These characteristics include perks such as employee benefits and
schedule flexibility. Another solution could involve employee referral bonuses: if a staff
member indicates a friend and that friend is qualified and gets the job, staying for more than a
determined period of time, then the referring employee gets a cash bonus on their paycheck.
This strategy works as an incentive and helps improve both recruitment and retention.

Reference
Dickins, Sarah. “Pubs and Restaurants: Staff Shortages Threaten Welsh Hospitality

Industry.” BBC News, 13 May 2021, www.bbc.com/news/uk-wales-57105976.

 Accessed 25 May 2021

Krook, Dana. “7 Ways to Deal with the Labor Shortage for Restaurant Owners.”

TouchBistro, www.touchbistro.com/blog/7-ways-to-deal-with-the-labor-shortage/.

Accessed 25 May 2021