Even the fast-food king isn’t immune to supply-chain shortages.
McDonald’s this week announced it had run out of milkshakes and bottled drinks at its restaurants in England, Scotland, and Wales as tightened post-Brexit immigration rules have made it more difficult to hire truck drivers to transport goods.
The U.S. chain restaurant joins a long list of other businesses that are delivering to stores less frequently and prioritizing the most profitable and most easily transportable goods as shortages take hold in the U.K.
Restaurants like Nando’s and KFC have shuttered doors and reported missing menu items, and supermarket suppliers such as dairy giant Arla and sweets manufacturer Haribo have reported stocking issues. Even British oil giant BP has had to temporarily close some of its U.K. sites because not enough unleaded gasoline and diesel had been delivered.
As economies emerge from pandemic lockdowns, every corner of the globe is dealing with supply-chain bottlenecks. But almost nowhere are the problems as severe as those in the U.K. There, the general supply-chain hiccups seen around the world have been exacerbated by a lack of workers, as post-Brexit employment regulations have forced many immigrants to return home.
Now, with a much-needed post-pandemic economic recovery on the horizon, U.K. businesses have been trying to find creative solutions to the shortage—even floating plans to put prisoners to work packing meat. But with the government of Prime Minister Boris Johnson determined to end the free movement of foreign workers, the problem is not likely to go away anytime soon.
Almost a million non-U.K.-born residents left Britain in 2020, according to the Office for National Statistics. The figure, heavily skewed by the COVID-19 pandemic, was the largest annual fall in resident population since World War II.
This population decline can be seen in the number of truck drivers plying their trade in the U.K., a key metric behind the supply-chain shortages. Based on a member survey, the Road Haulage Association, a drivers’ trade group, estimated earlier this month that there was a shortage of more than 100,000 drivers in the U.K.—a marked dent in the 600,000 drivers employed before the pandemic.
When the U.K. was part of the single European market, any EU citizen would be able to come to the country to work. But after Brexit, many truck drivers—often from Eastern Europe—were classified as “low skilled” and barred from entry under a new points-based system that favors educated and skilled workers.
Brexit problems have also made the job less profitable for those who have remained. Border bureaucracy has increased after the U.K.’s exit from the EU, causing delays that truck drivers who are paid by the mile rather than by the hour have found costly to endure.
In addition to Brexit-related difficulties—not to mention an aging workforce and a youth employment pool uninterested in joining the industry—the drivers’ association noted that some 30,000 driving tests did not take place last year as a result of the coronavirus pandemic.
U.K. recovery in limbo
The specter of a self-inflicted labor shortage is worrying as a much-needed post-pandemic economic recovery takes shape.
The IHS Markit/CIPS Composite Purchasing Managers’ Index (PMI) for August hit a six-month low of 55.3, falling from 59.2 in July. While any reading above 50 indicates growth, the declining numbers have led some analysts to worry that the bounce-back from the pandemic is losing momentum, with supply constraints hitting output growth in the manufacturing and service sectors.
The figures are “a stark warning,” said CIPS group director Duncan Brock.
He noted that the “abnormally large slowdown in overall activity” meant the accelerated levels of growth seen earlier in the summer, as the U.K. emerged from pandemic lockdown, were “not sustainable.”
“The worst shortages of staff and materials on record are mostly to blame,” he added.
IHS Markit economist Chris Williamson pointed out that the only time supplier delays had previously risen to this degree was in the initial months of the pandemic, and the number of companies reporting falling output owing to staff and material shortages “has risen far above anything ever seen previously in more than 20 years of survey history.”
Maneuvering through the shortage
The lorry driver shortage is making some companies go to extraordinary lengths to attract employees. Supermarket giant Tesco is offering a £1,000 bonus (about $1,370) to drivers who join before the end of September.
Others are working to train staff to do different jobs that face worker shortages. British supermarket chain Morrisons is currently putting together a program to train staff to become truck drivers. South African chicken restaurant Nando’s is deploying 70 members of its staff to help pack chicken for its U.K. stores after supplier Avara Foods said that its U.K. workforce had been severely depleted as a result of Brexit and that the labor shortage looked like a “structural change” that showed “no obvious signs of being resolved quickly.”
Meat industry leaders, meanwhile, held talks with the government this week to discuss the option of businesses’ employing prisoners and ex-inmates to help plug labor shortages.
The Association of Independent Meat Suppliers told the BBC that the industry currently had about 14,000 job vacancies and that with COVID-19, Brexit, and a lack of interest in meatpacking and truck driving jobs, a “recruitment crisis” loomed on the horizon.
As the number of businesses suffering from the pandemic mounts, industry groups are putting pressure on the government to make changes to the system.
In a letter to U.K. Business Secretary Kwasi Kwarteng, the British Retail Consortium (BRC) and freight trade group Logistics UK warned that consumers will suffer unless the government intervenes, and the British Poultry Council warned the government in a letter to Home Secretary Priti Patel that staff shortages would result in chicken producers cutting weekly supply by up to 10%.
In the face of pressure, the government has stood by its points-based immigration system. A government spokesperson told Fortune it “works in the interests of the U.K. by prioritizing the skills we already have in the U.K. while attracting the talent our economy needs to grow.”
“The British people voted for us to end free movement and take back control of our immigration system, and that is exactly what we have delivered,” the spokesperson said, adding that the government had “well-established ways” of working with the food sector to ensure businesses have the labor they need.
The spokesperson suggested that the sectors impacted had been “over-reliant on migrant workers for many years,” and that businesses should be making jobs more attractive to U.K. workers with better training, better career pathways, and higher salaries.
The government spokesperson added that Prime Minister Johnson’s administration had brought in a package of measures to tackle the heavy goods vehicle (HGV) driver shortage, with plans to streamline the process for new drivers to gain their HGV license and to increase the number of tests that can be conducted. The government has temporarily relaxed driver-hours rules as well to allow for slightly longer journeys.
For now, it seems U.K. consumers will simply have to endure shortages or find creative ways around them—such as by making their own milkshakes. A McDonald’s spokeswoman told Fortune that the chain did not have news on when the rich, creamy drinks would return.
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