SYDNEY, 19 September 2022
A new report from the leading shift work platform, Deputy, The Big Shift: The Changing Landscape of Australian Hospitality, reveals insights into how the hospitality industry is coping more than two years after the pandemic began amid widespread labour shortages and supply chain disruptions.
The report was created in partnership with independent labour economist Shashi Karunanethy, who provided expert insight into market conditions over an analysis of more than 14,987,187 shifts and 97,161,264 hours across an average of 31,718 shift workers per month
Major states hardest hit by labour shortages
Pre-pandemic, the hospitality industry relied heavily on migrants to fill staffing gaps. With many having to return home when the borders closed, and with a huge backlog for visa approvals, hospitality businesses are struggling with managing labour shortages. In fact, the Australian Bureau of Statistics found 51 per cent of hospitality businesses report facing difficulty hiring suitable members of staff.
According to Deputy data, this is particularly salient in major states like Victoria and New South Wales where businesses are rostering 30 per cent fewer shift work hours compared to pre-pandemic levels. Karunanethy attributes this to the fact that these areas contain major cities like Sydney and Melbourne, which are hubs for education and businesses and therefore draw in more international students and overseas workers, who filled positions in hospitality.
Conversely, states which rely less on these workers, such as Western Australia, have experienced the strongest recovery. However, these states aren’t spared from labour shortages either and are continuing to roster 10 per cent fewer shift work hours compared to pre-pandemic levels.
Generational shifts in hospitality
To fill the gaps left by migrants, locals are working more hours in hospitality businesses. While millennials continue to take up the majority of shift work hours, the generational make-up in the hospitality industry is shifting, with Gen X, Gen Z and Baby Boomers staffing more shifts.
Sit-down restaurants saw the greatest generational shift with a five per cent decline in Millennials, and a five per cent increase in Gen Z. If the sector continues to change at this pace, Gen Z will be the largest cohort in sit-down restaurants in five years.
Some older workers are even coming out of retirement to join the hospitality industry. In the accommodation sector, the proportion of shift work hours staffed by baby boomers grew from 13 per cent to 14 per cent and among cafes and coffee shops, the proportion of shift work hours staffed by Gen X grew from 11 per cent to 12 per cent. Karunanethy says this is likely due to businesses making a concerted effort to improve labour conditions in order to encourage older generational cohorts to enter the workforce.
Despite the increased participation, a recent survey found 16 per cent of Australian seniors have re-entered the paid workforce after retiring, while 20 per cent would consider returning to work. Karunanethy believes the government must strengthen workforce security and consider easing pension rules in order to encourage more seniors to join the workforce.
More women entering the hospitality industry
Like many other industries, hospitality businesses have made a conscious effort to provide more flexibility and certainty of shifts in order to encourage women to enter the workforce. Across the industry, women are working 48 per cent of shift work hours, up from 47.9 per cent in 2020. The largest increases for female shift workers were seen in cafes and coffee shops (four per cent), where women now work the majority of shift work hours.
However, with one in four potential workers identifying childcare as the main reason they are not working, universal childcare is the centre-piece reform to expand women's labour market participation. Childcare policies will also have knock-on effects on the ability of older workers to join the workforce, as Baby Boomers and Gen X also take up childcare responsibilities.
Shift workers working multiple jobs and longer hours
As labour shortages rage on across the industry, many workers have taken on jobs across various hospitality businesses. The share of hospitality shift workers with multiple jobs within the Deputy platform peaked in July 2022 at nearly three per cent of shift workers.
Additionally, shift workers are working longer hours, even compared to their average shift work hours before the pandemic or during peak shopping and festive seasons (e.g. Christmas) when shift work hours tend to peak seasonally.
According to Karunanethy, this can be attributed to the casualisation of work and increased opportunities in the gig economy. At the same time, many workers may be driven to increase their share of shift work to cope with the rising cost of living, with the percentage of shift workers working multiple jobs increasing in line with inflation rates.
Recovery across different hospitality businesses
Accommodations and sit-down restaurants saw the largest employment gains and recoveries into 2022, experiencing 50 per cent and 30 per cent increases in shift work hours respectively as compared to pre-pandemic levels. Given many have refrained from international travel, Karunanethy believes that Australians are turning to staycations and dining experiences to fulfil their experiential needs.
Bars and fast food restaurants, on the other hand, are continuing to face labour shortages. To date, bars continue to employ 20 per cent fewer shift work hours compared to pre-pandemic levels. The sector is facing a host of challenges, with increased price pressures from food and alcohol suppliers, as well as difficulty transitioning to new revenue opportunities in takeaway and delivery services.
While food restaurants are scheduling 40 per cent fewer hours than before the pandemic, this is largely due to the fact this sector has embraced food delivery models and labour-replacing technologies, resulting in having to employ fewer total shift work hours. Of all the states, Victorian fast food restaurants saw the largest decline in shift work hours. With the state experiencing the longest exposure to stay-at-home restrictions, consumers spending patterns in drive-through and in-app delivery purchases have now become sustained habits.
Businesses that prioritise health and well-being will thrive
Karunanethy predicts that given the tight labour market, employers who emphasise the mental well-being of workers will have a significant competitive advantage. He says, “Just like the rest of the population, Australian hospitality workers are experiencing burnout from the accumulated stress of having to balance work and family commitments, as well as crisis fatigue from constant exposure to news about local and global challenges.” Deputy data reflects this, with three per cent fewer hospitality workers reporting feeling “happy” or “okay” post-shift in May 2022, following the first interest rate hike. This data was recorded via Deputy’s Shift Pulse feature, which tracks worker sentiment and captures continuous anonymous feedback for managers to action.
“All of this comes on top of a shortage of workers across the industry, which has resulted in many working longer and harder,” Karunanethy continued. “Moving forward, leading with empathy and creating a positive working culture will set hospitality businesses apart, allowing them to attract scarce talent, and increase retention.”
Commenting on the report’s findings, Ashik Ahmed, CEO & Co-Founder of Deputy said, “Last year’s research braced us for many of the challenges hospitality businesses are currently facing, such as labour shortages and the adoption of technology. However, these businesses have also had to contend with many unforeseen challenges such as inflation hikes and supply chain disruptions.”
“Through it all, it’s been heartening to see the resilience of business leaders and hospitality workers, who have been able to seamlessly adapt to changes and keep their spirits high. I urge the Government to do more to help lighten the burden on the industry, starting with tax breaks and strengthening the definition of permanent employees to encourage more workers to join the industry. Long-term, I look forward to seeing increased spending behind hospitality training to encourage Australians to consider the industry as a viable career option.”
For more information and additional findings, access the full report here.
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About the research:
The Big Shift: The changing landscape of Aussie hospitality report was produced by the leading scheduling software platform, Deputy, utilising aggregated Deputy customer data. The report features an industry-focused data analysis of Australian shift workers across the hospitality industry. Independent Labor Economist, Shashi Karunanethy, analysed 14,987,187 shifts and 97,161,264 hours across an average of 31,718 shift workers per month to produce the insights in this report.
About Shashi Karunanethy PhD:
Shashi specialises in advisory services in policy and market design; thought leadership in city, workforce and future technologies; and economic strategies. He works closely with a variety of federal and state government entities, international development organisations, tech start-ups and ASX-listed companies.
Deputy is on a mission to Simplify Shift Work™ for millions of workers and businesses worldwide. The company streamlines scheduling, timesheets, tasks and communication for business owners and their workers. More than 320,000 workplaces globally use Deputy to manage to schedule and effectively communicate with employees, providing millions of shift workers with more flexibility and control over their schedules. Deputy’s software helps businesses navigate workforce legislation including wages, overtime, entitlements and penalties - providing businesses with tools to simplify compliance and build a thriving workplace.