The impact of Brexit on the outbound travel sector could put 25,000 jobs at risk and see a hike in holiday prices of almost a third, a new report warns today.
The threat of job cuts comes as British companies face having to pay into overseas state social insurance schemes, so escalating staff costs.
A survey of more than 130 firms highlights fears that British holiday companies will no longer be able to employ their UK staff on the continent on UK terms – for instance paying tax and National Insurance in the UK for the NHS – and will instead have to pay into much more expensive continental state social insurance schemes.
Such changes could mean:
• Holiday companies facing a 58% increase in costs
• Holiday companies employing less staff from Britain – reducing job and training opportunities at home, especially for younger Britons and negatively impacting holiday experiences for millions of British tourists
• The closure or merger of smaller family-owned holiday businesses
The cost increases of the scale predicted will just not be feasible for many companies and they are not set up to be able to employ EU nationals.
This means they will be forced to close or sell, putting in jeopardy the £16.5 billion the sector contributes to the UK economy and £1 billion it delivers directly to the UK Exchequer.
There are an estimated 25,000 UK nationals working in the EU supporting the seasonal holiday industry whose jobs are at risk with any of the Brexit scenarios currently in prospect, the report warns.
The companies – with a combined turnover of more than £470 million – were polled by independent research consultants LHM Conseil on behalf of Seasonal Businesses in Travel, an organisation representing over 200 UK outbound travel companies. The majority – 87% – of respondents are CEOs, managing directors or owners.
They have already been affected by Brexit uncertainty as they are posting 7% fewer British staff overseas this season.
The loss of jobs will be predominantly amongst the young aged 18 to 24 who are the bulk of those employed in the sector.
More than half (60%) of the companies surveyed run apprenticeships or training in the UK or the EU for their workers. A contraction of the sector will mean a loss of training as well as job opportunities for young people.
The study also points to a loss of both competitiveness and possibly market share to European-based multi-nationals.
Two thirds of those in the survey have shortened their accommodation leases, reduced their programmes and introduced break clauses around Brexit into their contracts.
This is on top of reductions in programme size reported by SBIT in December.
Holiday companies plan 12-18 months in advance, which is why Brexit has already hit these businesses.
SBIT is calling on the government to:
• Give travel businesses much needed operational certainty by continuing the freedom of labour movement for seasonal workers currently guaranteed by Single Market membership after March 2019
• Establish a longer-term practicable, “fast-tracked” work permit/visa process which will permit UK citizens to be able to work in Europe on a temporary basis to meet the seasonal demands of the tourism industry post-Brexit
• Retain the ability of workers posted abroad temporarily to remain in the social security system of their home nation
• Follow Abta’s calls for the protection of holidaymakers’ rights – EHIC and consumer rights – to maintain visa free travel in Europe for UK citizens and to protect the UK aviation industry
Katie Waddington, of Zenith Holidays, said: “Many independent UK holiday companies stay cost efficient and deliver great prices and service to holidaymakers by employing UK staff to work in the EU during peak times. Our membership of the EU means no visas or bureaucracy and staff taxes and NI contributions stay in the UK.
“The prospect of losing this has already started to push prices up as companies that can are trying to prepare for the worst. For others it will mean the end,” she warned.
Sarah Searson managing director of independent ski specialist operator Skiworld, said: “More than 75% of the team in the London office have worked overseas and they bring their knowledge and experience back into the company.
“Experience in customer service, logistics and operations are key skills in a service driven economy and it will be a loss for UK PLC, let alone for the holiday industry, if we cannot continue to seamlessly second our UK staff to Europe.”
Charles Owen, managing director of European Pubs, added: “After 14 years, I have made the painful decision to close two of our venues, Jacks Bar and Evolution in Meribel, as our business model is no longer viable under any forms of Brexit outlined to date.
“It’s impossible for me to wait until October to have the slightest idea of how I might be able to run these businesses and then have only five months to change or sell them.”
“These venues have hosted award winning musicians including Newton Falkner and Natalie Imbruglia and comedians Al Murray and Marcus Brigstocke to name but a few. We have employed and trained hundreds of British staff and given many of them their first significant job, and in doing so we have contributed to the UK tax revenues.
“All of that has come to an end as a direct result of Brexit. I am still waiting to see any up-side to this.”