The Tourism Congress 2015: Labour and Delivery
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A keynote presentation by Philip Mondor, President, Tourism HR Canada, on labour and service delivery in the tourism sector. Presented at The Tourism Congress, December 1–2, 2015, The Westin Ottawa, Ottawa, Ontario, Canada.
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The Tourism Congress 2015: Labour and Delivery
- 1. Labour and Delivery A keynote presentation by Philip Mondor, President, Tourism HR Canada Presented at the TIAC Tourism Congress 2015, December 1–2, 2015, Ottawa, Canada
- 2. Labour and Delivery Published November 2015. Tourism HR Canada. Copyright © 2015, Tourism HR Canada. All Rights Reserved. Tourism HR Canada 4-71 Bank Street Ottawa, ON, K1P 5N2 Canada tourismhr.ca
- 3. Tourism HR Canada is a national organization working for the tourism sector in Canada, an $88.5 billion industry employing over 1.7 million people including over 500,000 youth. Its main goals include improving the quality and mobility of the tourism workforce and supplying tourism businesses with the labour market intelligence they need to plan for and overcome their current and future human resource challenges. Tourism HR Canada is recognized as a global leader in setting occupational standards, building competency frameworks, developing occupational training and certification programs, conducting research into the tourism labour market, and analyzing the resulting data to plan and implement HR strategies for the industry. Tourism HR Canada under the Emerit Consulting banner, performs consulting services for all sectors in occupational training and instructional design, assessment tools and certification programs, human resource planning and strategy, and labour market research and analysis. The team has worked with private companies, educational organizations, professional associations, and all levels of government, both in Canada and internationally.
- 4. DARREN REEDER Good Afternoon PHILIP MONDOR TONY POLLARD DARLENE GRANT FIANDER JUDITH ANDREW Labour and Delivery
- 6. 1.7 million workers and growing Other Industries, e.g. retail JOBS IN TOURISM INDUSTRIES JOBS ATTRIBUTED TO TOURISM DEMAND 1.7 million 628,000
- 7. 1.7 million workers 200,000 employers Food & Beverage Services Recreation & Entertainment Accommodation TransportationTravel Services 52,000 255,000 194,000 265,000 925,000
- 8. 228,500 Unfilled Jobs SUPPLY DEMAND 2010 20302015 2020 2025 Projections by 2035: 300,000
- 9. Spending up 56% = $293 Billion
- 10. For every dollar spent, 3.2 dollars is generated in the community
- 11. Tourism is vital to Canada’s economy; it is a key driver of socio-economic progress. Tourism plays a significant role in future job creation.
- 12. Full-year jobs that will go unfilled by 2030 53% 46% 34% 56% % of youth workers 32% 6,267 8,738 20,536 38,782 42,690 Food Counter Attendants F&B ServersCooksBartendersProgram leaders & instructors
- 13. Dissatisfaction with Immediate Manager Compensation Career Opportunity Work Life 10121834 Percentage of Respondents Top Reasons for Voluntary Turnover
- 15. 2020 2030 FRANCE 6 - 1 GERMANY - 4 - 23 ITALY 8 - 4 SPAIN 17 - 3 UNITED KINGDOM 6 - 1 RUSSIA - 5 - 24 BRAZIL - 7 - 33 CANADA 3 - 11 MEXICO 6 - 8 USA 10 4 CHINA 7 - 3 INDIA 6 1 INDONESIA 5 0 JAPAN 3 - 2 SOUTH KOREA - 6 - 26 Global Workforce Crisis
- 16. Tourism is a Growth Industry
- 17. Employees stay for things they get uniquely from you.
- 18. 2015 Comprehensive, Accurate, Timely Labour Market Research Do you need workers? Able to meet needs? Where are customers coming from? Specific skills or specialized training?
- 19. What we are Hearing... Rural – Urban Divide Difficulty finding qualified workers: cooks and housekeeping is greatest concern Rooms are kept empty/out of circulation: no staff Stress, double duty Restaurants and recreation businesses operating at reduced levels Some businesses closing Economic conditions compounding problem
- 20. Tourism Labour Market Global Trends SOCIAL POLITICAL HISTORIC ECONOMIC REGULATORY ECOLOGICAL TECHNOLOGY S P H E R E T
- 21. S Social and Cultural Context Workers in short supply Rapid change in cultural diversity Increased affluence with new and emergent economies: different travellers Reform of education and training Idea of ‘service’ or guest/customer experiences have changed › Authenticity › Quality › Tailored experiences and services › Workforce diversification strategy › Flexible work, and work re-engineered › Investment in automation › Investment in training, education: cultural intelligence Global Trends & the Tourism Labour Market
- 22. P Political Context Governments operating with shorter planning cycles: little emphasis on long-term Increased policy and efforts to promote improved learner and worker mobility [Paradox: tighter immigration rules] Greater need for sustained public-private partnerships › Coalitions, partnerships, shared resources › Increased coordination Global Trends & the Tourism Labour Market
- 23. H Historic Context Tourism plays a strong socio-economic role Tourism as a growing economic driver: increased competition, new products and services ‘Unskilled’ to increased need for a highly skilled: work has become more complex and specialized; image liability Investment companies, less private ownership Rise of a ‘global workforce’ › Places of employment = training institutions › Improved efforts to address image and ‘professionalization’ of sector Global Trends & the Tourism Labour Market
- 24. E Economic Variables Volatility is a new norm Projected growth (globally, locally) Companies invest less in their people; others invest more › Growing awareness or appreciation of the value of workers to tourism Growth hampered by shortage of qualified workers Investments in infrastructure mixed Creep of added taxation / tariffs › ‘New’ business skills and continued professional development Global Trends & the Tourism Labour Market
- 25. R Regulatory Influences Security concerns and agendas Increased regulations and requirements › Accommodation/F&B: building codes, access, grading, gaming control › Transportation: tariffs, licensing of carriers › Tour operators, agents: licensing, regulation on promotion and delivery › Outdoor recreation, attractions: regulations on safety › Standards of practice need to change › Tourism workers are on the ‘front line’: skills linked to security Global Trends & the Tourism Labour Market
- 26. E Ecological Factors Weather, climate events and impact on ecosystems › Insurance › Natural resources, icons Greater adoption and demand for sustainable practices Growing interest and importance of corporate social responsibility, improved ‘greening’ practices › Scheduling of seasonal operations › Ability to respond to climate events, risks, safety concerns Global Trends & the Tourism Labour Market
- 27. T Influence of Technology Proliferation of direct marketing and use of social media More informed consumers Increased use and reliance by consumer, businesses, job seekers, educators... on communications, marketing, products and services driven by technology [Paradox: More connected than ever, but less human contact] Education and training through technology ‘Big data’ information: reliable, just-in- time › Adoption of new media and nimbleness to adapt: technology departments Global Trends & the Tourism Labour Market
- 29. A Passionate Workforce Drives Memorable Visitor Experiences
- 31. Tourism: Banff & Lake Louise’s Only Economy 20% to 30%+ Total Compensation Paid Above Base Hourly Rate 20% to 40%+ % Above Hourly Minimum Wage Most Employees Are Paid
- 32. TIAC/BLLHA Study • Survey: 61 Employers Representing 2125 Employees • Labour Force Turnover Statistics – By NOC Code
- 33. Labour Shortages Quantified (July) 404 Workers = to 17% of Existing Workforce Average Worker Shortfall Per Business 21
- 34. JULY Shortage Of 106 Employees 1136 Room Hotel Rooms That Cannot Be Cleaned 20% of Destination Room Base Light Duty Cleaners
- 35. Employees Hired to Job Vacancy Ratio 1:1
- 36. Service Level Impacts • Diminished Service Levels • Financial Appeasement • Curtailed Hours of Operation Administrative New Hires/Term. Housing Recruitment July Overtime 9,324 Hrs YTD OT Costs Up 24%
- 37. Additional Impacts Contracted Labour Costs 30% to 80% Above Prevailing Wages Added Demands on Existing Workforce Attrition Up as High as 28% YTD
- 38. Recommendations Short & Long-Term Measures • TFW Tourism Stream • International Experience Canada (Working Holiday) • Immigration Reform • Housing Investment
- 53. We all have a role. Shared voice, common mission.
- 54. Thank you Information, Collaboration, Inquiries: TourismHr.ca
- 55. tourismhr.ca
Editor's Notes
- Jobs Attributed to Tourism Demand is different than Jobs in Tourism Industries. Jobs Attributed to Tourism Demand are all the jobs in the Canadian economy created by tourists spending money. However, tourists also buy clothing, groceries, etc. so not all Jobs from Tourism Demand fall within tourism industries. Jobs in Tourism Industries are all the jobs in the five tourism industries – Food and Beverage Services, Accommodation, Recreation, Transportation, and Travel Services. The number of jobs in the Tourism Industries exceeds the Jobs Attributed to Tourism Demand because the tourism industry provides services to local residents (e.g. restaurants) – not just tourists. Jobs in Tourism Industries – 1.68 million in 2012 – likely close to, or exceeding 1.7 million in 2014. This is about 10% of all jobs in Canada.
- The number of jobs in each of the five tourism industry groups: Food & Beverage Services, 915,000; Recreation & Entertainment, 275,000; Accommodation, 230,000; Transportation, 222,000; Travel Services, 44,000. There are roughly 170,000 tourism businesses in Canada.
- 228,500 unfilled jobs if we fail to get the workers... 300,00 by 2035 Jobs are created by people spending money, we can estimate how much people are likely to spend at tourism industry businesses and how many jobs are needed to support that spending. Current estimates suggest that over time, demand (i.e. what people are willing to spend) will exceed the ability of the industry to meet that demand due to a lack of workers. For example, imagine a restaurant that is very busy. The owner is considering opening a second location. However, the owner has difficulty finding enough staff for the current location. Demand exists for the second location (and with it several jobs for servers, cooks, supervisors and managers). However, if the owner chooses not to open that second location because they think it will be too hard to find the workers, those potential jobs go unrealized. The gap between supply and demand represented the cumulative effect of the potential jobs that go unfilled. The tourism sector is unable to meet its full potential.
- New data to 2035 = 332 billion Spending on tourism goods/ services projected to increase 56% to reach $293 billion (2030). This is spending in Tourism Industries. It includes spending by tourists and by local residents (e.g. someone eating at their local pub). This is the potential demand that will not be met if restricted by a lack of workers who can provide service – money will be spent elsewhere.
- Employer of Choice
- Tourism creates business growth and incentivizes investment in infrastructure development.
- NOT SURE IF… percentage of young workers is by occupational category… this is what is illustrated Program leaders & instructors in recreation and sport Number of full-year jobs that will go unfilled by 2025 in each occupation
- Hay Study – What they told Hay Group What do those who left say? Based on data collected by a third party (same group that completed exit interviews in slide 1). This graph shows the reported reasons for voluntary turnover. This study interviewed employers, co-workers and employees in the process of quitting; asking each why they left. Note that those leaving were most likely to report doing so due to a conflict with their direct supervisor and lack of autonomy, than in regards to their pay. Note that conflicts with a manager when dug into the root of an issue may be dependent on not being given autonomy and opportunity to master a skill. Being micromanaged is equivalent to being untrusted in doing your job. This leads to the opposite desired effect. People gain an immense amount of satisfaction when they feel like they are getting better at what they do. And when they have achieved mastery of one thing, they have the opportunity to learn NEW things, ultimately giving them a sense of greater purpose. This flies in the face of conventional thinking. As people are generally not intrinsically lazy unless we treat them as such. Paying them more to motivate them is treating them as lazy. Pay them fairly and give them fair raises. Then give them more challenging things to do. And watch as their productivity and loyalty increases. Hinkin & Tracey – The costs of Turnover
- Labour shortage, increased competition = supply, lack of competitive advantage Skills mismatch = lack of qualifications, minimum experience... All levels – entry, mid, management, specialized Cultural intelligence = increased diversity of workforce and visitors/clients – affects how we work, what we do... huge cultural shift (corporate, Canadian workplaces) What are we doing about it? What can we do about it?
- Labour shortage/surplus in 2020, in 2030
- Employer of Choice
- Managers and supervisors – still have job to complete... Burned out
- The current tourism workforce is young: one-third of all employees in the sector are in the 15-24 (nearly double what it is to the overall economy). Canadian demographic continues to age, while largest percentage of unemployed = youth and aboriginal populations. The sector will face continued workers in short supply and will need to compete with other sectors to attract and retain workers. Competition for workers extends beyond tourism and beyond Canadian boarders; supply of workers is increasingly scarce Rise and demand of ‘global workforce’ - need for increased worker and learner mobility. Rapid change in cultural diversity, need for improved ‘cultural intelligence’. This applies to knowledge of working in increasingly diverse workplaces as well as serving increasingly diverse markets. Growth of direct marketing – rise of social media, dependence on communications, marketing, products and services driven by technology; must be flexible/tailored to each user’s needs, just-in-time/responsive, and be cost-effective. Growing interest and importance of corporate social responsibility (CSR). Growth of ‘middle class’ (new, different) tourists, e.g. China, India – changing travel patterns and traveller expectations.
- Many changes in public policy: fewer social based programs, resulting in the decline of ‘sector councils’ and significant reduction in traditional funding. Shift in funding that is centralized and disseminated at federal level, to funding through provincial and territorial initiatives, all of which have unique administrative structures and different policies and priorities. Election year: anticipate continued changes and uncertainty. Appears to be focus on short-term initiatives over long-term strategic aims. Significant changes to immigration policy and access to foreign workers. ‘Safety and security’ agenda: emphasis on increased risks, terrorism.
- Tourism is a key economic driver and a significant employer Canada is celebrating 150 in 2017, with several events centred on increasing tourism trade The image of the of the sector and jobs continues to be problematic Council was as sector council: effectively a government program; now greater degree of separation and steadfast mandate The current Board structure is based on earlier requirements of the federal Sector Council Program, with representatives from all constituency groups (e.g. business, labour, education, government, national associations) Cornerstone programs remain important, relevant Competency and intellectual material part of council’s profile; reputation for quality, rigorous tools and programs Focused primarily on hospitality segment of sector, and the need for a diverse workforce Programs were aimed at workplaces over other institutions; demand and interest by education bodies, serving agencies emerged and represent a significant segment of current revenues Council has robust, trustworthy research and methodologies – ‘Canada’s most trusted tourism labour market intelligence’ Standards, training, career guidance information, business tools – the Works – considered high quality, industry-led Strength of federated makeup of organization, inclusive and not exclusive Change in leadership, change in business model and imperative for self-sufficiency
- Great fluctuations is the new norm; more volatility Lower Canadian dollar (recent) Pace of change is greater Growth hampered by shortage of qualified workers Some indications of reduced investments in infrastructure in certain sectors Businesses are operating with ‘shorter planning cycles’, making decisions on training based on short term and immediate needs (rather than long-term goals)
- Increased regulations and requirements, e.g. sustainable development, protection and conservation; health and safety Accommodation/F&B: building code, access, grading, gaming control Transportation: tariffs, licensing of carriers Tour operators, agents: licensing, regulations on promotion and delivery Outdoor Recreation, Attractions: regulations on safety procedures Increased taxes/tariffs (particularly with hotels, airports) Increase of bilateral agreements, multilateral agreements = access and the shift in travellers
- Greater adoption and demand for sustainable practices Increased interest and initiatives to strengthen Corporate Social Responsibility Climate events impacting business planning linked to seasonal practices, and increased costs associated with insurance; increased risks associated with extreme weather impacting on tourism and events, and the vulnerability of the sector to such weather
- Increased use and reliance by consumer, businesses, job seekers = in the business of technology; people are more connected than ever (most likely via a smartphone) even in most impoverished societies. Paradoxically, mass communication technology is leading to less human contact and use of devices such as smartphones, computers, and television as the primary means of communicating with each other. Increased use of technology to delivery education and training and facilitate learning administration: provides flexibility, just-in-time, low cost option Driving market changes: need for greater sophistication in management of technology and social media Information – driven: emphasis on access to comprehensive, trusted, timely and highly specified or contextualized data; ‘big data’ movement, emphasizing a shift to analysis of data and increased levels and types of data being collected Increased efficiencies, relatively low costs, and new options to work in ‘virtual’ context; and necessity for Council’s international projects More informed consumers or consumers that have done online research and also contribute to customer review sites, et al
- Our tourism workforce is in the business of helping visitors create epic visitor experiences. But....we can’t do this if the people working for us don’t subscribe to the belief that the service to others, story-telling, interpretation the going above-and-beyond for someone else is an honourable calling, one that fills your soul at least as much as it does your wallet We are proud to be able to say that many of the workers who come through LMIA or IEC streams are among the most productive members of our workforce. They are some of our best brand ambassadors. They amplify Canada’s tourism marketing efforts in their home countries.
- In support of some of the challenges we face in Banff & Lake Louise it is helpful to consider our labour challenges in the broader context of what is happening in Alberta. In case you missed it, there has been a confluence of economic and political events unlike we’ve seen in a long time. Oil supply sits at unprecedented levels and demand cycle economics suggest market normalacy is still a long ways off. The provincial government’s decision to increase the minimum wage by 150% over 3-years was not based on any meaningful economic analysis; the full effects of this decision have yet to be felt Changes to the TFW program have further destabilized our industry workforce. 50% of the reduction in foreign entries that have/will occur under the previous government’s reforms will be felt in Alberta alone. SO.....while the economy is certainly down, the good news is Alberta’s labour market remains strong with the 4th lowest unemployment in the country. That said, this is not translating into any overall improvement to recruitment success for our members.
- All employment in Banff National Park works directly or indirectly in support of tourism. We are a one industry destination. We have to attract and hire the best to meet the expectations of our visitors. Our first priority has. and always will be Canadians. When we surveyed our members earlier this year we found that a majority pay their employees anywhere from 20%-40% above minimum wage. TOTAL COMPENSATION accounted for (eg. subsidied housing, meals, bonuses, benefits, etc...), those employees stand to make between 20% - 30%+ their base hourly wage.
- We are pleased to have been working with TIAC over the past several months on a labour shortages study that attempts to show how big our hiring challenges are in Banff & Lake Louise. This study involved surveys of 61 employers representing over 2125 employees and the collection of labour force turnover statistics to quantify the impact of labour shortages on the local business community. This has been a substantive undertaking, but with upward of 80% participation from our lodging sector partners over the past 5-months we’ve been collecting data we can now speak quite confidently about labour market impacts in Banff & Lake Louise, distilling impacts down by specific occupation code. The TIAC & BLLHA study entitled “Banff & Lake Louise Labour Shortage Study” has just been posted to the TIAC website so I would encourage you to have a look at the document.
- While the labour shortfalls are pronounced in every month we’ve tracked, looking at July there was a labour shortage of 404 workers reported by respondents; this translates to a labour shortage of 17% of the existing workforce. What this means is that on average, each business in our destination was short 21 workers in the month of July. Its difficult to service, let alone up-sell visitors when there is such limited labour supply. The consistently hardest positions to fill regardless of season include: Room attendants, Kitchen Help, Line Cooks & F&B Servers
- To better illustrate, let’s look at the challenges we have recruiting Light Duty Cleaners. A shortfall of 106 Light Duty Cleaners in July correlates to the manpower needed to clean 1136 guest rooms EVERY DAY! –working regular hours. 1136 rooms is 20% of our national park room base. Our November statistics also show we were short 59 room attendants, or the number required to clean a 632 room hotel.
- Equally concerning is that we were only able to hire about one worker for every one advertised jobs that remained vacant and unfilled when we reviewed our statistics earlier this summer. But it gets worse. If we had to rely solely on using a Canadian workforce to fill the gap in July and there was no access to non-Canadian workers, we would have had to hire about 2.5 to 3x more Canadians to every 1 Canadian that we were able to hire in July. Owing to the high rate of Canadian Worker terminations we already see and the number that don’t show up for work after having been offered a job, these Canadian hiring targets would be impossible to reach, let along maintain. THERE IS SIMPLY NOT ENOUGH CANADIANS WILLING OR WANTING TO WORK THE JOBS WE HAVE AVAILABLE.
- The Costs associated with staff turnover are not insignificant. There are the increased costs associated with hiring and terminations because labour force retention is decreasing. Then there are issues associated with moving staff in and out of employee housing units, with greater frequency. Then there is the cost associated with advertising jobs and travel costs associated with bringing candidates to market. Then there is Diminished Service Levels - Due to the increase in number of applicants that accept jobs and don’t show up or show up and then move to another employer for a few more cents on the dollar, many employers are faced with the prospect of lower – or less consistent - service levels and/or quality of their product. Financial Appeasement – with current labour shortages visitors are having to wait longer for food, waiting for rooms to be available at promised check in time, waiting for rooms to be cleaned. This has meant more concessions have had to be provided to visitors. This has a measurable financial impact. Curtailed House of Operation – labour shortages can also lead to a rationalization of operating hours; we expect Alberta’s new minimum wage policy will also have an impact over time. An F&B provider recently reduced their hours of operation by 4 per day; that move will impact annualized revenues by 8%. OVERTIME – The estimate of overtime paid in July was 9,324 Hours; this is conserative. Many employers have reported that YTD OT Costs are up over 24%.
- A growing number of local hotels have had to look to 3rd party contracted labour services from outside the community (eg Calgary, labour pod arrangements). This is far from a perfect solution – and it speaks to the desperation of some employers when these recruitment channels come at a cost of 30% - 80% over prevailing wages. Due to constant pressure on business operations, many staff have been asked to work longer hours and defer vacation simply to keep up with the volume of work. The longer this cycle continues, the greater the chance of burn-out, or key staff leaving. As it stands to reason the more experienced staff are also the most productive, if they disappear, its more than just a 1FTE productivity contribution an employer is looking to replace. Some larger employers have told us that the attrition of the more stable core of their workforce has increased by over 28% on a YTD basis.
- These are just a few of the recommendations contained in the report, but they are the ones BLLHA is most focused on: TFW Tourism Stream Armed with the labour shortage data we’ve been collecting which shows specific labour gaps by NOC code (and month) and with occupancy forecast data our destination collects which provides a very clear understanding of how busy summer 2016 will be, we will be working with TIAC and other partners to present a case to the federal government that tourism labour shortages are real and that we need a system of expedited visas and work permits to satisfy our projected labour needs for summer 2016 IEC Working Holiday– We are concerned by earlier government reports that suggested a reduction in the number of IEC applicants beginning in 2016. Banff Lake Louise is heavily dependent on the IEC program: much more so than the LMIA stream. We would also like to see the reinstatement of Two-Year Australian Permits. This was a short-sighted decision. Immigration Reform – We will work with the Hotel Association of Canada and TIAC to advocate that the Government of Canada provide a pathway to citizenship for lower skilled workers as a long-term solution for the accommodation sector, as well as other facets of the tourism industry. Housing Investment– We would be remiss not to mention that Housing is one of the top reasons we know we struggle to attract more Canadians. Banff has been operating at a zero % vacancy market for at least a couple years now. A housing study shows that we need between 300-700 new apartment-style rental units to create a healthy rental market vacancy rate of between 3% to 5%. This is an important strategic priority for BLLHA and a lot of work is being done on this front as we speak. We are expecting some positive news in the not too distant future regarding new rental housing development initiatives.