Executive summary
This report is based on contemporary issues in the hospitality industry which are affecting the labor market. The report analyses three issues out of the many affecting the industry. These include labor shortages, diversity and inclusion, and low wages. The report also offers recommendations to organizations in the industry based on diversity management, leadership, and training and development.
Introduction
The hospitality industry is a large and growing sector in the world and a contributor to the growth of various economies. According to Statista Research Department (2021a), as of 2020, the global hospitality industry market grew by 3486.77 billion USD. Leading organizations in this industry and significant contributors to its growth are Hilton Hotels, Marriot Hotels, Holiday Inn, and Hyatt Hotels (Statista Research Department, 2021a). The sector has organizations operating in the capacity of hotels, lodgings, restaurants, and other organizations offering food and accommodation. However, this industry has faced some contemporary issues in the recent past, affecting its operations and determining the progression of performance. Such problems are also direct aspects such as sustainability and profitability for organizations in the industry.
Literature review
Conceptualization of contemporary labor market issues in the hospitality industry
The hospitality industry is a significant employer globally, which shows its labor-intensive capacity. However, its operations face various issues, making it seem ineffective and negatively impacting operational performance. These are based on labor shortages, poor diversity and inclusion, and low wages (Croes, Semrad, and Rivera, 2021; Boston Hospitality Review, 2021; Dean, 2021). These issues make it hard for organizations in the industry to attract and retain talent and need to be more effective according to exemplary customer service, journey, experience, value, and satisfaction. It has also led to economic losses based on low and poor productivity associated with poor customer service provision. Also, the pandemic has further exacerbated these issues, resulting in job losses and lower worker wages. Such has also affected worker satisfaction with their roles and pushed others to look for better opportunities and not return after the pandemic to their positions (Croes, Semrad, and Rivera, 2021; Nathaniel, 2015; Benner, 2016).
Analysis
Labor market issues in the hospitality industry (Contemporary issues)
Labor shortages: the industry has been facing high impacts in terms of labor and the inability of organizations in the sector to have the right personnel to perform various functions and support its growth (Croes, Semrad, and Rivera, 2021). This has been attributed to the pandemic and Brexit and the impacts these two externalities have had on organizations in the industry. Also, changes in migration laws have impacted the ability to gain the proper labor on time and to support various organizational operations (Croes, Semrad, and Rivera, 2021; Scheiber, 2021; Cameron and Marson, 2018; Sweney, 2021; Bhattarai and Penman, 2023). A report by the British Hospitality Association (2022) shows that the country is experiencing labor shortages which have led to 45% of organizations in the industry reducing working hours and resulting in a 21 billion euros loss in revenue. This is attributed to Brexit, in which the country lacks the number of migrants who flowed from other countries in the EU to the UK to add on and complement the skills existing in the UK (Cameron and Marson, 2018; Manning, 2021). Brexit and the resulting change in labor laws and trade rations with EU members thus have not acted to the advantage of the UK. The labor shortage is also associated with the pandemic and how it negatively impacted service industries, especially the hospitality industry (Manning, 2021; Javed, 2020).
The pandemic resulted in the closure of organizations and the inability to perform at total capacity as before. In regions such as the Gulf, accommodation rates are reduced. According to an article in the Arabian Business (2021), the Gulf might have lost 60 billion USD due to Covid-19 in 2020. Such at the time of publishing, the article was expected to rise in the future as the Covid-19 pandemic became an issue for organizations not only in the hospitality industry but also in other industries. According to Bhattarai and Penman (2023), the industry in the USA is still experiencing a shortage of over 500,000 workers, not because the workers disappeared but because they found something better to do or opportunities with more pay and flexibility. Death based on Covid-19 could have also contributed to the shortage of workers and skills. According to British Hospitality Association (2022), high skill shortages are experienced for chefs, assistant managers, and kitchen porters. This is then related to the rise of skill shortages in various roles in the industry. Such an issue contributes to low quality and more workload for the existing staff. Various skills still need to be improved, as indicated in the case of the UK. This is the same for other regions, such as Australia, where organizations such as chefs cannot cover various positions (Skills Certified, 2020). According to Statista Research Department (2021b), organizations in the UK face skill shortages aligned with various aspects; 22% of the organizations have a broad skill gap or a shortage of skill vacancies. 19% have a skill gap, and 7% have a skill-shortage vacancy (Statista Research Department, 2021b). This data shows the issue’s significance to contemporary organizations in the industry.
Diversity and inclusion: diversity outlines the ability to support differences among various groups. Diversity is associated with organizations supporting this and giving workers equal opportunities in growth and development (Singal, 2014). This is related to the business and social case of diversity (Singal, 2014). These approaches justify the need for diversity and its importance to organizations and society. Diversity is associated with innovation and high performance for businesses, and studies indicate that companies should have strategies that aid in boosting diversity (Singal, Nguyen, and Papagiannis, 2020; Hofstra et al., 2020). The equity theory also supports diversity by upholding the need for organizations to ensure that all workers are treated in the same way and given the same opportunities and chances for growth. Equity theory shows that fairness and similarly treating the workers boost organizational performance, worker morale, and satisfaction (Ryan, 2016). Also, the democratic and transformational leadership theories show how organizations can benefit from upholding diversity and inclusion in their operations. It can aid in making informed decisions based on quality and varying insights (Brown, Brown, and Nandedkar, 2019). Diversity and inclusion is an issue in the hospitality industry and has become a challenge, especially in filling leadership or management positions (Perkowsky, 2021). The industry is still male-dominated, and organizations are still trying to uphold equality in the workplace and foster an inclusive work setting (Boston Hospitality Review, 2021). According to Fox (2020), a Castell Project was conducted to improve operations in the hospitality industry. The findings were that organizations in the industry lacked many leaders from the black community. Many organizations are yet to boost their effectiveness in this area, which is evident in their management structure (Boston Hospitality Review, 2021; Perkowsky, 2021). Also, discrimination and prejudice in the workplace issues align with a need for more awareness of working in a diverse setting. Discrimination in the workplace in the industry is directed towards the minority races, such as Latinos and Black Americans, and the female gender (Nathaniel, 2015; Benner, 2016). According to Nathaniel (2015), the Nigerian Hospitality industry is impacted by discrimination, one of the major issues contributing to gender inequality in the workplace. Benner (2016) indicates that Latinos make up about 16% of the workforce in the USA and whites 55%.
Low wages: According to Dean (2021), the wage rate for organizations in the hospitality industry is lower than those from other industries; however, labor unions are adding to addressing this scenario and making organizations pay workers good salaries for their efforts. Dean (2021) indicates that post-pandemic, the workers in a study provided that they did not want to return to work based on low wages, with 45% desiring higher pay and 29% more benefits. This is aligned with labor shortages in the hospitality sector and the workers’ inability to return to work based on the same pay they got before the pandemic. In the USA, the hourly wage rate is about 16 USD, below the industry standard for an acceptable wage (Dean, 2021). Also, according to Sheehan (2022), young people prefer to do something other than work in the industry as they do not like the way organizations in the sector pay and thus would prefer to work in other sectors which appreciate them better. Low pay is associated with the female gender and the case of inequality where according to Benner (2016) and the British Broadcasting Corporation (BBC) (2022), women in the USA and UK are paid low wages than their male counterparts.
Global trend implications of labor market issues
Geographical Implications:
Labor market issues impact how organizations operate in specific regions around the globe. For instance, the inability to attract and retain talent might make it hard for the organization to support all its operations in all its branches (TUC, 2019; Degree Query, 2020; O’Graddy, 2021). Also, it will have low reputation and image rates in regions where it has unskilled workers, and it is known for its lack of inclusion and upholding diversity.
Economic Implications:
Labor issues such as skill and worker shortages can impact the economy. That is, the organizations will need to be more productive to support economic growth and the associated impact on their profitability with the economy. High turnover rates can also impact profitability, and low wages reduce consumer spending and the ability to support their daily needs, leading to a negative economic impact (Chetty et al., 2020).
Socio-Cultural Implications:
Issues such as a lack of diversity and inclusion can affect relationships and reduce satisfaction, especially regarding discrimination during hiring, pay, and promotions. Discrimination leads to poor working conditions, which could translate to poor customer service provision. Also, a lack of diversity and inclusion might result in organizations not understanding cultures correctly as they do not have workers who can guide operations with specific cultures, leading to the worker and customer dissatisfaction (Singal, Nguyen, and Papagiannis, 2020; Hofstra et al., 2020).
Impact
Workers: these labor issues impact workers in various ways. The organization’s lack of diversity and inclusion fosters low motivation and satisfaction and prevents opportunities for growth and employment in specific industries (Singal, Nguyen, and Papagiannis, 2020; Singal, 2014). Thus, it contributes to low living standards. Also, the workers need to be sure about the security of their jobs, and the poor working conditions do not support their motivation to keep working for the organizations.
Employers: employers who uphold diversity gain in terms of innovation and providing solutions to boost competitive edge. Also, the lack of skills and low wages lead to low productivity; the organization needs more workers, or the existing workers must be more motivated to perform as required (Cameron and Marson, 2018; Manning, 2021). Also, high turnover results if the organization does not value its workers through compensation and good working conditions.
Contemporary debates
Sustainability: sustainability has become an issue for concentration in an organization and its ability to ensure a safer world for future generations. The social aspect and pillar of sustainability outline the need to add value to societies (Aynalem, Birhanu, and Tesefay, 2016). Thus, failing to offer good pay and reduce discrimination goes against this and the 2030 UN Sustainable Development goals.
Labor rights: labor rights have also become an issue with various organizations treating their workers poorly (Ife, Soldatić, and Briskman, 2022). Thus, this topic illuminates some of these labor issues, which show the importance of organizations upholding labor rights by reducing discrimination, low wages, and poor working conditions.
Recommendations
This report provides various recommendations for organizations in the hospitality industry. First is the implementation of string diversity management measures which will aid in supporting the workers and reducing discrimination. Diversity management will aid in dealing with issues with pay, labor, and skill shortages, as the organizations will welcome all people (Hunt, Layton, and Prince, 2015).
Also, organizations must boost leadership and ensure constant leadership development programs for the workers and managers. Leadership is crucial in upholding performance and ensuring workers are motivated and encouraged (Brown, Brown, and Nandedkar, 2019). The organization should concentrate on transformational leadership, which can aid in supporting the progression of diversity and bringing the required changes to these organizations (Brown, Brown, and Nandedkar, 2019). Leadership will boost workers’ satisfaction and allow these organizations to prevent key contemporary labor issues. Also, organizations in this industry should invest in training and development on other factors, such as diversity and the adversities associated with discrimination and segregation (Brown, Brown, and Nandedkar, 2019; Harvard Business Review, 2016). This will equip the workers and managers with the proper knowledge and skill to reduce this and have a suitable work setting for the workers.
Conclusion
Organizations in the global hospitality industry face various issues that make them ineffective in adding value to their operations and customers. These issues relate to labor shortages based on issues such as Covid-19 and Brexit, which have also resulted in skill shortages (Barnes, 2022). Also, organizations in the industry are facing other issues, such as a lack or inadequacy in upholding diversity and inclusion in their operations and low wages. These issues make it hard for the business to support effective labor relations and operational efficiency. Thus, this report recommends that organizations in the industry have a strong diversity management framework which should be supported by leadership training (especially transformational leadership) and other forms of training relevant to addressing labor issues.
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