Labour Shortage in the Food Industry? Nonsense. Our Labour Market Has Been Broken For Years [Sylvain Charlebois]

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“We’re hiring” signs are simply everywhere. Some blame overly generous employment insurance programs which is keeping many highly capable individuals in their homes. Others will point to the younger generation not willing to work or are blaming the virus itself, because people are in fear of it. Rumours of agism have also emerged to explain why we are seeing more boomers exiting the market altogether. The fact of the matter is that it is likely a mixture of several factors. Blaming one factor more than others is baseless. Regardless of the reason, the labour shortage we see in Canada has not only been there for a while, but it is also happening elsewhere around the industrialized world. The food industry, of all sectors, is likely one of the most affected by what is happening.

Let’s start with the most obvious issue we see as consumers almost every day: The labour deficit in food service. Restaurants are cutting hours, even closing several days a week just because they can’t get anyone to serve, cook or clean. A recent survey this summer suggested that restaurant operators are now providing more incentives to their new employees. A total of 40% are offering extra paid vacation, 37% hope to persuade new hires with better job titles, while more than a third are offering signing bonuses, sometimes over $1,000. As wages rise though, so are applicants. Some ice cream shops and independent restaurants have doubled wages in recent months, and many of them were flooded with applicants. With more money, candidates will show up. In the U.K., wages in food service have risen by almost 15% in 6 months.

But with low margins coupled with highly unpredictable demand patterns in food service, it’s not that easy. Many restaurant operators have next to no cushion to increase wages. To offset staffing woes, many are now reverting to different managerial decisions by limiting the number of operating hours. Some are closing Mondays, Tuesdays, and Wednesdays, or are opening fewer hours during the day. In fact, don’t be surprised if a greater number of restaurants are managed like flights in the airline industry. Airlines will only have flights if they can fill the aircraft. If not, they’ll cancel it, one way or another. More restaurants are likely to open only if most seats can be filled and will menu manage differently. In other words, expect fewer choices. In fact, some restaurants have started to offer only one or two choices of entrees. Given financial pressure points, competition, and higher input costs, it is the only way for operators to run a profitable operation.

In food distribution, the situation is beyond comprehension. On farms and in processing, labour shortages are not just about convenience and profitability. It also means that a lot of food goes to waste. Around 35.5 million tonnes of food goes to waste across Canada’s supply chain each year according to a recent Second Harvest report. Short-staffed operations have only seen produce like mushrooms, lettuce and broccoli not making it to the human food chain, just because getting enough bodies out in fields was not possible. Canadian food manufacturing had 28,000 vacancies before the pandemic. Some suspect that number may have gone up by as much as 50% since March 2020.

In food retail, if you see an empty shelf, it’s not because we’re running out of food. It’s likely because nobody was available to fill it. Or the supplier may have run out of truckers. Like it or not, it is mostly likely staff-related.

Not only do governments need to find ways to incentivise people, young and old, to participate in the economy, educational institutions like high schools, colleges and universities also need to value the food industry and showcase it as a viable career path. The current situation is certainly getting many employers to think different about how to manage their business. But they need help.

The reality though is that our labour situation is everyone’s business. Canada has provided one of the most educated workforces in the agri-food sector, in the world, from farm to fork. Many farmers, people in food processing and distribution now have graduate degrees. Wages and revenues have barely moved in tandem with the amount of knowledge gain, novel technologies used, and skills acquired by the workforce in the industry. For the most part, while the food industry has long provided Canadians with high quality, safe food products we all reasonably expect, it’s always been about cheap calories for consumers. High quality food products require strong human capital. 

In sum, we’re not really experiencing a labour shortage per se, far from it. It is very much a lingering broken labour market which has gotten worse because of the pandemic. All of it of course is galvanized by an economy filled with consumers looking for the best deals, most of the time by choice, necessity, or both. If you’re already willing to pay $30 for that next club sandwich at a restaurant, or pay an extra 10% in tips, or even an extra 5% to 10% for food at the grocery store, it means you’re very much aware of what lies ahead.

Blaming food companies and restaurants is easy. Asking them to increase to merely wages without paying more for their food and service is just not realistic. At least not anymore. 

Article Author

Sylvain Charlebois
Sylvain Charlebois
Dr. Sylvain Charlebois is Senior Director of the Agri-Foods Analytics Lab at Dalhousie University in Halifax. Also at Dalhousie, he is Professor in food distribution and policy in the Faculty of Agriculture. His current research interest lies in the broad area of food distribution, security and safety, and has published four books and many peer-reviewed journal articles in several publications. His research has been featured in a number of newspapers, including The Economist, the New York Times, the Boston Globe, the Wall Street Journal, Foreign Affairs, the Globe & Mail, the National Post and the Toronto Star.

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