Will investment turn the tide?
Published:  16 December, 2011

The press this year has been filled with news of rising unemployment, with newspapers gleefully pouncing on figures of 1m young people out of work, as stagnant growth and fears of double-dip recession stifle investment and pitch the UK into a self-fulfilling spiral of decline.

But away from the gloomy headlines, how has the economic situation affected employment within the meat industry, as well as its ability to attract young people into a career in the sector, and what are the implications for employers of newly introduced legislation? 


A leading recruitment consultant to the food manufacturing industry says that recruitment in the sector as a whole during 2011 has been pretty buoyant, despite the slightly earlier onset of the seasonal Christmas slowdown. He says that by calling for often highly specialised skills, recruitment within the meat industry has proved reasonably stable over the last year. As obvious as it may sound, he points out: “If you’re recruiting a technical manager for a meat company, realistically, you’ll want to find someone with meat experience. In the food sector, there’s always a shortages of engineers. Past governments didn’t put enough money into apprenticeships, so engineers as a whole are always hard to come by.”


However, he points out that recruitment has changed a lot in the last few years, with websites such as LinkedIn helping companies to identify people with the relevant skills and experience for their business. He also notes that the actual process tends to be taking longer because companies are being more than usually cautious, rather than a perceived or real shortage of suitable candidates. “Companies will certainly be reserved in terms of recruitment,” he says. “When people are spending part of the budget on recruitment, paying agencies and salaries, they want to make sure they get it 110% right. While you may not find someone immediately, you can find them.”

Changes in legislation

In addition to the economic climate increasing employers’ caution when taking on staff, this year has seen several important changes introduced to employment law, which will further give them pause for thought. The first day of October was a bumper day of legislation, when three long-anticipated measures came into force — the Agency Workers Regulations (AWR), the abolition of the default retirement age, and a 2.5% rise in the national minimum wage. 


These changes have given a lot for employers in the meat industry to think about, according to Kate Gardner, a partner at Clarke Willmott LLP, who advises on all aspects of employment law, and specialises in agricultural and farming businesses. She says: “The change [to the AWR] will mean that, from this October, if you do take on agency workers and they are working in the same – or a similar – position for a period of 12 weeks, then you are obliged to provide them with the same basic terms as permanent workers.”


Whereas in the past, employers might not have been making bonuses available or paying agency workers at different rates, Gardner points out that these issues are now covered by the new rules, which aim to make a fairer, more transparent system. The majority of the benefits don’t kick in until the agency worker has been with the company for three months, but some facilities, such as a crèche or staff café, do have to be made available to agency staff from day one. 


Gardner says she has had some queries already over the question of when 12 weeks is not 12 weeks – for example what happens if you move a worker to another sector doing a different role, do the 12 weeks start again? However, she says that the rules are very stringent and, if in doubt, employers should seek legal advice rather than fall foul of the law. 


However, these measures go further than enhancing the status of agency workers, as Gardner thinks it may prompt businesses to rethink their strategy on employing agency workers, who until now have typically been viewed as a more flexible, short-term solution than permanent staff. “Many employers use agency workers as a pool — as a way of providing cheap extra labour when needed,” she says. “Now they are having second thoughts as it may not be a cheap pool of labour any more. If they are going to have to give them the same benefits as they would give their permanent staff, they may wonder if it is not better to employ permanent staff rather than use agencies.”


Gardner points out that processors may rethink how they do things, perhaps using part-time workers or increasing the amount of overtime of existing staff. As yet, there have been few test cases arising from the new legislation, but 1 January will be the threshold of the first three months and she expects that the effects may not been felt until next year. 


However, the challenges posed by the AWR may be offset by another change, which may provide employers with greater flexibility in the process of hiring and firing staff — particularly if they are taking on new people rather than using agencies. Due to come into effect in April, it will extend the period an employee has to have been in a job before they can bring an unfair dismissal claim, from one year to two, which Gardner sees as a positive move. 


Other legislation introduced includes the much-publicised abolition of the default retirement age, which many fear will cause headaches for employers. “Unless people got their act together last April – and it had to be as long ago as that,” warns Gardner, “if an employee is going to be 65 after 1 October this year, you cannot retire them lawfully, unless you can objectively justify it. And that is difficult.” 


Another change which Gardner feels is going to cause ongoing problems for bosses — partly due to its unpredictability — is the already legislated, but rarely used right for people to swap parental leave and be paid for the majority of it. “People will cotton on to this swapping of paternity/maternity leave and I’m not sure employers understand that,” she warns. “It may not impact, but there will be some people who will want to use it. Then it all goes into play. An employee goes on paternity leave — do you get an agency worker in or is that going to be more expensive? Do you recruit someone new or take on an older person? There are all sorts of things that interact.”   


The effect of many of these changes may not be felt immediately, but employers need to be aware of the potential pitfalls, take advice and make sure their policies are up to date. 


Guidance for processors

The British Meat Processors Association (BMPA) recently issued guidance for processors as a response to the findings of a statutory inquiry by the Equality and Human Rights Commission (EHRC) into recruitment and employment practices in the meat industry.

The BMPA document was developed as an agreement between retailers, meat and poultry processing companies and labour provider representatives to provide meat processors with advice on fair practice and transparency, and ensure that they comply with best practice. Stephen Rossides, director of the BMPA, says that it should ensure fair and proper treatment of workers, while retaining companies’ ability to flexibly manage their workforce in line with the circumstance of their business and customer requirements. 


Skills and training


One of the notable features of the meat industry is the high dependency on skilled migrant workers. According to statistics from skills company Improve, around 36% of the industry’s workforce is made up of migrants. 


Although it does fulfil a need, Bill Jermey, chairman of the Meat Training Council (MTC), sees this dependency as a potential problem for the industry, fearing it may result in a skills gap in the long term as companies fill vacancies with skilled or non-skilled non-UK nationals, instead of trying to attract — and train up — young people to make their career in the meat industry.

This is a particularly valid point as the number of 16- to 24-year-olds not in education, employment, or training, the so-called NEETS, passed the 1.6m mark last month. 
Jermey says: “I believe people should be thinking long-term and doing more to bring young people into business. There are some good examples of people taking a long-term approach, but there are others who are taking a more short-term approach, because that’s all they can afford to do at the moment. Because of commercial pressures, they cannot think more than a few months ahead.”


While there have been notable casualties of the economic climate, and some companies have consolidated operations in the last years in order to bring down costs and maintain a competitive edge — resulting in processors laying off staff, reducing pay temporarily and even plant closures — there are many encouraging signs of investment coming from both within the industry and also from government funding.


Recently, the industry has been invited to help shape pre-employment training schemes, aimed at bridging the gap between those looking for jobs in the food and drink sector, and processors’ expectations. As research from the National Skills Academy shows, only 8% of unemployed people would think of the meat industry when looking for a job.


Meanwhile, companies such as Dunbia, with its new academy, and Vion have shown their commitment to training investment. In September, Vion unveiled a Centre of Excellence at its Broxburn pork processing plant, supported by a £2m grant from Scottish Enterprise and Skills Development Scotland. This forms a core part of a multi-million training and development investment, with around 100 of the 250 extra jobs created being modern apprenticeships. 


However, it may take a short while for the effects of these developments to trickle through. As Jermey says: “Apprentice numbers are rising, but you don’t just turn on a tap. It will be a couple of years before we start to see a significant difference.” 
However he is adamant that the only way to secure the long-term future within the industry is actually from businesses themselves. He says: “The initiative needs to come from businesses. SMEs need all the help they can get, and if schemes like [the pre-employment scheme] can help encourage SMEs to do something, all well and good. But the main drive for this has to come from the large companies.
“

They have to treat training their staff as an investment and look at what they can get back from training in terms of productivity improvement. Schemes like Food Manufacturing Excellence is a great way to get there, involving your whole workforce in taking the business forward.” 
With this in mind, Jermey remains hopeful. “In reality, the tide is turning,” he says. “University fees are rising, there is funding for apprenticeships and there are far more youngsters available to the market than there were. It’s potentially the start of moving in the right direction — we’re not there yet but it’s a start.” 


Rossides agrees: “Member companies aren’t highlighting skills shortages at a management or shop-floor level as a high priority issue. However, it’s important that the industry looks to the future to ensure it has the right skills and training programme and qualifications to ensure it can source the right people for a forward-looking industry in the long-term.”




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