One of the hardest hit sectors during the COVID-19 pandemic has been hospitality, with the food and beverage service industry’s 725,700 workers bearing the brunt as venues shut down.
Overall 2.3 million people were affected by job loss or reduced hours in May according to the ABS, and in the same month the number of unemployed people in Australia rose by around 80,000 people to 927,600.
While much of this will hopefully be short term as people return to work as restrictions ease, the impact on the hospitality sector, may last much longer according to industry professionals.
Luke Butler, managing director of Hastings People, which specialises in hospitality and leisure recruitment, said that the immediate aftermath of the restrictions saw steep declines in casual workers, and it is unclear when these levels may normalise again as different states react differently to the easing of restrictions.
“Hospitality clients were strategic about who they kept on JobKeeper and who they didn’t,” he explained.
“There is a lot of money to outlay upfront with the JobKeeper program and it was often casual employees who often were let go in order to preserve cash.”
Butler explained that JobKeeper is also keeping a lot of the industry in a state of suspense.
“There are two very distinct worlds, one is with Jobkeeper and one is without, and right now it’s hard to see what will happen,” he said.
Even with JobKeeper, casual employees are only eligible if they were employed “on a regular and systematic basis” for at least a year on 1st March 2020.
According to figures given to the Government, 46.3 per cent of casual employees in accommodation and food services had been with their current employer for less than 12 months, effectively cutting out a huge number of casual workers, not to mention foreign nationals who were not eligible for JobKeeper and many of whom had to return to their home countries. It has been heavily criticised by the hospitality industry for its shortcomings.
“I wouldn’t suggest too many casuals have been kept on at most hospitality businesses despite incentives,” said Butler.
“[Business owners and managers] probably did not elect to do that, which is why there was such a big shortfall between what the government ended up spending and what they thought they would spend.”
But as states cautiously lift restrictions, the question remains what the hospitality sector will look like after such a major blow.
According to ABS statistics for August 2019, 26.4 per cent of employees aged 15 to 24 years were casual workers who had been with their current employer for less than 12 months.
This indicates that COVID-19 disproportionately affected young people, but also the talent pipeline into the hospitality industry.
“What we’re seeing from a permanent perspective is the best and key talent is being retained and looked after,” said Butler.
“But we’ve already experienced a significant skills shortage in hospitality management roles across the past 10 years, driven by the growth of hospitality venues and competition for good people.
“This meant less experienced people promoted more quickly and who didn’t have the same level of skill others might have had who had spent more time in roles learning,” Butler explained.
“While people are moving out of the industry, there will be a fair bit of movement if people are displaced in other areas, and a skills shortage [at those levels] as a result.”
This is relevant at both casual and more permanent managerial levels.
“Right now it’s harder to find and employ people in hospitality into leadership positions because they’re just not moving for fear of starting a new probation period, and have another wave of Coronavirus hit during that.
“The thinking has changed so much from the beginning to now. Many operators think there will be a huge volume of talent available however it is actually the opposite.”
Another factor affecting the industry right now is a court case earlier this year – WorkPac Pty Ltd v Rossato – which opened the door for casuals to be owed further entitlements. It’s a particular concern for employers who are already feeling the strain of diminished revenues from venue closures.
“Double-dipping of entitlements remains a concern,” said Sylvia Elix of Frontline Recruitment Group, which provides permanent and casual staff for hospitality business in ACT and NSW.
“This has caused great uncertainty. It has also been difficult to get long-term casuals receiving JobKeeper to come back to work once the doors have reopened.”
Elix advised that employers provide staff with a detailed contract that explicitly states their employment capacity, what it means and what benefits it comes with, and the hourly rate.
“People should have the right to choose. If this is important to them, they will seek part-time work with lower hourly rates but with benefits, over casual, which provides higher hourly rates but no benefits.
“The reality is many individuals are engaged as part-time, with benefits, at a lower hourly rate, however are not aware of their entitlements.
“The most important thing is to make permanent part time employment more attractive by being employee- and employer-friendly.”
The future of casual work
Sylvia Elix of Frontline explained that people have historically preferred casual work due to hourly rates and flexibility.
“Anecdotally, staff prefer to be casual employees,” she said.
“They prefer to receive the casual loading upfront rather than accrue sick leave or holiday leave. It allows them rostering flexibilities – particularly for a young workforce to fit their employment around study obligations.”
Now, there will be even more of a focus on casual employees.
“There will be more focus placed on casual staff in lieu of full time staff to give them that flexibility, so if there is another wave employers will want to have less fixed staff,” explained Hastings’ Luke Butler.
Elix of Frontline agreed. She said there will be more need than ever for casual workers, but said it is a diverse industry and therefore different venues in different states will have different needs.
“This is a mixed bag and, again, dependent on the venue as to how casual staff are used or not,” she said.
“As an example, I have many clients who feel they find savings of time and money spent on bookkeeping/accounting, rostering, recruiting, paying wages, paying super, paying insurances, and like the ease of not spending hours in the office, rather on their business and only having to pay an invoice.
“I feel that coming out of COVID that there will be uncertainty and until there is confidence back in the market, engaging casuals is probably a safer way to cover being a target should a second wave appear.”
Hastings’ Butler said that employers were stuck between a rock and a hard place when it came to deciding on employment mix.
“As operators the intention was always to get variable labour replaced with fixed labour,” he said.
“Many would prefer a full-time employee because it costs less overall, but inevitably you always have to supplement with casual staff as you run out of hours for full time staff, if you need them for odd or specific hours – it’s getting that mix right.
“There are lots of long-term casuals in the hospitality businesses, especially for people studying as it’s a great way to earn money outside of traditional education hours.
“Permanent staff may be less likely to move around for the next 18 months, and I don’t know if it will relate to casuals, but once things normalise, the same factors in cost-saving will come back.”
However that being said, Elix explained that hospitality employers would be a lot more cautious in future.
“Having spoken to a few other employers recently, the feeling seems to be that casual workers will be used more sparingly,” she said.
“The cost of labour in our industry is already in many cases unsustainably high, so to be using casual labour after such a long period of low revenue due to COVID-19 would be counter intuitive.
“Venues will be looking at ways to maintain revenue without the need for excessive casual labour.”