Forecourt Trader - 30 years at the heart of the fuel retailing community

Money Talk: Demand versus supply in the limited labour pool

In late February the Home Office floated its 'Post Brexit immigration plans' and immediately found itself on the receiving end of cries of alarm from employer organisations across the economy: farming, hospitality, healthcare and retailing among them. The major bone of contention is the intention to severely restrict effectively stop the influx of what they describe as 'low-skilled' workers offering cheap labour from abroad. In future, employers are expected to utilise technology and/or somehow to persuade some of the "eight million economically inactive" people already in the country to do the jobs currently performed by migrant workers.

There's probably more than one bright-eyed PhD student in some Silicon Valley campus who would eagerly convince many people that it's just another year or two until they perfect a robot that will effortlessly serve meals in restaurants, look after patients suffering from dementia or other disabling illnesses and do just about anything else you need a human to do today. In the real world, however, technology is neither cheap nor perfect. It usually requires considerable capital investment up-front, and even before that outlay has been amortised, tends to be already obsolete. Invest in today's state-of-the art system and in five years' time the manufacturer will advise that they no longer support 'legacy' systems.

As for what's there now: how many people are required on hand waiting to sort out the frequent 'crashes' at supermarket self-checkout machines? Wouldn't they be better just putting those people on traditional checkout counters?

As for trying to persuade the "economically inactive" to pick up their sickbeds and get a job, good luck. Any study of British economic history will tell you this country has relied on successive waves of immigrant labour to do the unpleasant, dangerous or physically-hard work in the economy for several centuries.

It's not just about cheap labour many employers say they simply couldn't get other people to do these jobs for any length of time, no matter what the pay on offer. Quite simply the local pool of labour found the jobs too dangerous, too dirty or too physically demanding, at whatever economically affordable wage they were offered.

The forecourt retail industry hasn't generally been a major employer of migrant workers, other than perhaps the ubiquitous hand car wash or car valet centres. Certainly not to the same extent as the hospitality sector.

limited pool

But if petrol forecourts don't use so much 'cheap' migrant labour, why should you be concerned? Simply the basic economic question of supply versus demand. This industry relies on the same limited pool of labour, often at (or just above) Minimum Wage rates. If that pool shrinks, you'll be competing ever-harder with all of those other low-pay, 'unskilled' industries to try and staff the shop and forecourt. If those employers can't find an immediate technological fix but want to stay in business then they'll have to respond by increasing pay rates (and therefore their prices, but that's another problem, one that we'll have to ignore here!). If that happens it'll inevitably create pressure on every other employer currently working around Minimum Wage levels to raise pay rates or lose staff. It's even possible to imagine a scenario in the near future where the current idea of a legal Minimum Wage becomes a bit of a relic employers trying to fill vacancies will have to offer rather more.

tech alternative

Of course there could be a tech alternative. Look at sites that have opted to reduce staffing by utilising pay-at-pump technology: does it reduce potential shop sales, and if so does the saving in one area cover the lost profit from the other? And putting self-checkout tills into a petrol station again is there a greater saving from that if either shoplifting increases, or you still have to have a 'body' on hand to deal with when a customer can't get the thing to work properly? Still, look on the bright side: you might just be able to open that old rollover car wash again quite soon...

Finally, having mentioned Minimum Wage rates, we really should remind you that those are about to increase from April.

The new rates are:

25 and over: £8.72 (currently £8.21)

21 to 24: £8.20 (currently £7.70)

18 to 20: £6.45 (currently £6.15)

Under-18s: £4.55 (currently £4.35) so if you've not already done so, you'd better check your staff details now and make sure that each employee is in the correct age category come the start of April.

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Weekly retail fuel prices: 1 June 2020
RegionDieselLPGSuper ULUL
East112.6064.60121.00107.57
East Midlands112.14121.84107.50
London113.60124.14108.74
North East110.9563.90125.31105.73
North West111.56121.79106.78
Northern Ireland108.93114.90103.65
Scotland111.31122.05105.92
South East113.3559.90123.22108.19
South West112.0958.90123.24106.99
Wales110.68120.57105.17
West Midlands112.32122.47107.23
Yorkshire & Humber111.71121.15106.44

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