labour shortage

Higher wages may help address the foodservice labour shortage

As restaurateurs continue to struggle with post-pandemic labour shortage, business owners are looking for new recruiting strategies and ways to combat employee turnover. According to David MacDonald, senior economist for the Canadian Centre for Policy Alternatives, it’s not a labour shortage we’re facing, it’s a wage shortage.  

Competition for good candidates is fierce, and restaurateurs will need to do everything they can to stay afloat and build back their pre-pandemic numbers. It seems reasonable that employers would offer higher wages to make employment more attractive. While some restaurants have raised pay, generally, the industry is still falling short of workers’ expectations.

MacDonald referenced recent data from a temporary labour force survey asking workers for the lowest wages they would accept. Taking a look at data from current job postings, he noted that 63 per cent of positions offered wages lower than the survey’s minimum.  

The average wage posted in the foodservice industry is $15.85 an hour, according to the data. In contrast, workers are looking for a minimum of $18.84.

How can the restaurant industry close that gap, amid continued inflation costs?

This is an unfamiliar disadvantage for restaurant owners. In recent decades, the ratio of job seekers to job postings was as high as 6:1. July’s numbers indicate that there were a million Canadians seeking employment and just over a million positions being advertised. So why don’t these numbers add up? According to David, as many of these jobs are offering wages much lower than employees are willing to work for, “with fewer workers applying for each job, they can afford to be a bit choosier when they’re in high demand.”

MacDonald reports that businesses will have to step up, offering higher wages to make it “worth a worker’s while.” Studies show that wages are slowly increasing, but not fast enough to compete with the higher cost of living. Hourly wages have grown 5.2 per cent year over year, as overall inflation rose 7.6 per cent.

Where profit margins are low, this will be a challenging endeavour, leaving many restaurants short and unable to compete. They will have to find ways to adapt. James Mallios, managing partner of Civetta Hospitality, was able to add an administrative fee to each guest cheque to subsidize increased employee wages. Other restaurateurs may try to pass this cost onto the customer, but with US menu prices already jumping 7.6 per cent, this could be a tough sell.

The good news is that MacDonald predicts that this disparity will even out as interest rates rise and inflation cools. When that happens, restaurants will be better able to manage wage costs to get back to business as usual.  

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