Brace yourself for increased labour costs

By Laurence Gibbons contact

- Last updated on GMT

Businesses should brace themselves to hand over more money to workers
Businesses should brace themselves to hand over more money to workers

Related tags: Labour providers, Wage, Supply and demand, Minimum wage

The food industry should brace itself for an increase in labour costs as the number of people in employment reaches record levels, warns the Association of Labour Providers (ALP).

Unemployment figures have fallen to 6.2%, the lowest since 2008, according to the Office of National Statistics.

With more people in work in the UK than ever before, labour providers are reporting the first signs of a tightening of labour supply in some areas of the country, ALP claimed.

Come to an end

ALP director, David Camp, said that numerous years of downward pressure on labour provider margins had come to an end.

“Labour providers fulfil a key supply chain security role in sourcing and supplying the high quality workforce that keeps the UK’s food and agriculture sectors working,” ​he said.

“With a tightening labour supply come increased costs in the form of additional recruitment expenditure and increased churn which add to the operating costs of labour providers.”

The law of supply and demand would prevail, and labour providers offering a high quality, reliable workforce while complying with legal and ethical standards would charge appropriately for their services, Camp added.

Businesses that paid unrealistically low rates for labour were knowingly or recklessly conniving in illegality, he claimed.

“These rates can only be achieved either through worker exploitation or tax evasion, or both,”​ he said.

Exploitation

“As a result, the rate paid by growers and food producers for labour is a key variable that the Gangmasters Licensing Authority ​[GLA] monitors when looking for exploitation.”

ALP has now issued all its members with The October 2014 Labour Provider Charge Rate Guidance.​ This includes the new national minimum wage rates, new Scottish agricultural wage rates, pensions auto-enrolment charges and other updates.

Earlier this year ALP, the GLA and Migrant Help encouraged food and drink businesses to follow a three-step approach​ to tackle forced labour, as part of its Stronger Together campaign.

The campaign is sponsored by UK retailers and supported by bodies including the British Growers Association, British Retail Consortium and the Food and Drink Federation.

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