UK’s ‘New Norm’ – Inflation, Labor Shortages and More

David Stevens, CEO of the United Kingdom’s (UK) Textile Services Association (TSA) said the economic challenges confronting commercial launderers in Great Britain are equal to if not more critical than those facing operators in North America. Nonetheless, he sees the situation as likely to stabilize in the near term.

“I think we’re just living in the ‘new norm,’” said Stevens, whom we interviewed while he was attending TRSA’s March 22-23 Legislative Conference in Washington, DC. “I’m not saying it’s right. But we’ve just got to get on.”

The recent news on inflation in Great Britain disappointed Stevens, whose association represents 75 UK laundry operators and 48 supplier partners. Newly issued reports say inflation rose 10.4% in February, reversing a three-month decline. On March 23, the rise in inflation spurred an interest-rate hike by UK authorities from 4% to 4.25% – the highest in 14 years. This move will make borrowing costlier, which puts a crimp on expansion plans for laundries that have generally experienced a “bounce back” amid the demise of the COVID-19 pandemic.

“I would say the bounce back’s been quite good,” said Stevens, who splits his time between the TSA and a UK-based laundry consulting firm he operates called NewGen Business Services. “The hotels are full again,” he says. Some areas of the UK have recovered more quickly than others, he added. “I think there are some regional variations. London’s recovery was slow, but it’s picked back up now. We’re seeing more Americans and some return of Asian visitors.”

One COVID hangover is the fact that commercial travel in the UK hasn’t recovered. “Business is the one area that’s still quiet,” Stevens says. “So we would say tourism in London and tourist areas are full.” Some of this traffic is British travelers, who are staying in the country due to rising costs. “You’ve got a ‘staycation’ element and that’s probably not COVID,” Steven said. “That’s the cost of living.”

As for labor, the UK’s shortage of laundry employees stems in large part from Brexit, the UK’s separation from the European Union (EU) that was finalized in December 2020. That move, which grew out of a desire for greater autonomy from European governance, spurred the departure of many Eastern European immigrants, who previously could live and work in the UK, citing EU immigration rules.

While declining to take a political stand on Brexit, Stevens said that as a practical matter, he believes UK leaders are unlikely to rejoin the EU. However, he added that the government could soon relax immigration rules to address the labor shortage. “No political party is talking about revoking Brexit,” Stevens said. “So I think it will soften. I think there’ll be elements of Brexit around access to staff.”

Part of the problem with loosening immigration rules is that outsiders are likely to find the prospect of working in the UK less attractive than before, due to its break with the EU. This poses serious challenges for laundries, as well as the hospitality industry at large. “I think Brexit has had a real consequence in that the UK is seen as less welcoming for people to come and set up,” Stevens said. “Hospitality is being crippled by it. If you speak to our associates, you know. UK hospitality, they are struggling massively to get staff.”

The TSA is doing all it can on both the labor and inflation fronts to aid its members, Stevens said. For example, he cites a lobbying victory in the form of an extension of fuel subsidies that were slated for elimination as part of the UK’s push to address climate change by reducing the use of fossil fuels. “They have extended climate-change agreement, which for laundries means they get a refund on fuel,” Stevens said. “We’ve been operating with it for 20 years, so it’s not new. But it was going to end. They’ve now rolled it on.”

Two current TSA initiatives, or “schemes” include:

• A one-year apprenticeship program with 50 participants aimed at drawing young people into careers in the linen, uniform and facility services industry.
• A “Second Chance” training program for prison inmates. In this partnership with the UK prison system, TSA member companies train inmates who are already working in prison laundries to prepare them for jobs in the laundry industry after their release. Watch for follow-up coverage in Textile Services Weekly.