Tottenham Report: The labour shortage — Where did everyone go?

December 14, 2022 10:00 PM
Photo: Shutterstock
  • Andrew Tottenham — Managing Director, Tottenham & Co
December 14, 2022 10:00 PM
  • Andrew Tottenham — Managing Director, Tottenham & Co

After pandemic restrictions were lifted, the retail gaming industry in Europe opened up, but unlike the U.S. where “happy days were here again!” and the customers came roaring back, the return to normal in Europe has been muted. 

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A number of possible factors contribute to this difference. Firstly, the psyche of the Europeans may be somewhat different than our U.S. cousins and we were somewhat more tentative to return to “normal” life, possibly because of the devasting illness and death rates in the early days of COVID. 

Another possibility is that Europe has a much more mature igaming industry. Thus, during the months when the gaming venues were closed, customers got used to playing and betting online. It may take a little time before some people will miss the social aspect of casinos and betting shops and some will not miss it at all. 

The industry both in the U.S. and Europe is currently facing a staffing shortage. When businesses were forced to close, a good number of people re-evaluated their lives, determined that they wanted something different from their jobs, and left the industry.  

According to a survey by the UK’s CV-Library, 41% of UK workers left the leisure/hospitality sector in 2020 and 2021. Of those who left, only 60% would consider returning, but only if conditions changed. That means 40% (16% of the total sector workforce) of those who dropped out will not return. 

The UK is in a worse position than most other European countries due to Brexit. The leisure sector was highly dependent on foreign labour, mainly EU citizens who worked in the UK, taking advantage of the EU’s principle of free movement of labour. When the pandemic hit and businesses closed, EU citizens returned to their home countries to wait out the pandemic, but under the rules imposed by the UK government post Brexit, many of them could not come back. Their “right to remain” had been extinguished. 

In EU countries and the UK, this deficit means table games do not open or casinos are forced to close earlier than they otherwise would. Management expends energy and resources trying to recruit more staff. 

But the main question the gaming industry needs to resolve is why did the pandemic cause people to leave the sector en masse? Once we understand this question, we may be able to come up with some solutions. 

Hiring for all positions has become a challenge. There is a mismatch between what employers offer to attract new employees or retain existing ones and the wants and needs of the wider labour pool. 

Traditionally, companies have offered compensation, titles (status), and promises of advancement. In an industry that is very hierarchical, the latter promise rarely bears out. 

Whilst important, these are obviously less important or, dare I say it, unimportant to quite a few potential hires. Employers offer more money to attract new employees, but all they are doing is shifting some of the existing workforce, reshuffling the deck, and fuelling wage inflation. It is not leading to an increase in people joining or old workers rejoining the industry. Companies are fishing in the same pool, but to be successful, they need to widen the pool.  

Why did they leave the industry? Survey after survey of those who left during the “Great Attrition” has shown that many quit because they believed their employers and their immediate managers didn’t care about them and their future.  

All is not as bad as it appears. According to a report by McKinsey, some people could be coaxed into the industry if the conditions were right. This is not just about compensation levels. Some of those surveyed by McKinsey, especially the younger ones, put weight behind flexibility, career development, advancement potential, meaningful work, and a community of reliable and supportive people. Compensation was some way down the list. 

If companies are to be successful in attracting this cohort, they need to offer flexible working hours, invest in career development, and cultivate a workforce culture that engenders a sense of belonging. Not “we will employ you when we need you and pay you only when we want you to work”. The zero-hours contract has a lot to answer for. 

Employers will have to invest more in their employees’ well-being and training middle managers to be attentive and creative when dealing with the needs of front-line employees. 

To appeal to these potential workers, a new package might include pairing tuition subsidies with flexible work schedules to accommodate classes and development programs that offer clear career paths. It is not enough to say, “We are a good employer”. Such words need to be followed by deeds. 

We are seeing an increase in automation on the casino floor, with electronic table games, automatic cashout machines, and the like, and this trend will only increase if labour shortages continue. But instead of continuing to fish the same pool, using the same methods to recruit staff, employers need to look more broadly at how and where they recruit their staff. Changing the requirements for a position and/or what the job entails may increase the number of people willing to be recruited.  

The total labour pool is what it is. It is no good for management to complain that younger people are not interested in working in casinos, that people today don’t know what work is, and variations on the theme. That does not solve the problem. As I have suggested in this article, what is needed is a rethink of what the position being recruited for entails, who might be a potential hire, and how and where to recruit them.