The hospitality sector across the UK and Ireland is a cornerstone of employment, tourism, and economic development. However, post-pandemic recovery has brought persistent challenges most notably, the growing struggle to attract and retain skilled professionals.

Rising costs, labour shortages, and shifting workforce expectations are straining the industry’s ability to build and maintain a strong talent pipeline.

This blog examines the current landscape of hospitality employment in Northern Ireland, the Republic of Ireland, and the rest of the UK, highlighting how each region is responding to these pressures and what more is needed to future-proof the workforce.

Northern Ireland: Resilient, But Under Pressure

• Recovery & Workforce Challenges:
  Northern Ireland’s hospitality sector has rebounded strongly from the pandemic, with a comparatively modest employment loss of around 10% (versus ~20% in Scotland and Wales) and a full recovery by 2022. Despite this, staffing remains a major concern: 94% of employers report difficulties in recruitment, and 84% face staff retention issues, with turnover nearing 75%.
• Revenue Growth vs. Rising Costs:
  Post-pandemic, the sector added approximately £700 million above 2019 levels. However, increased revenue is being eroded by soaring costs. Employers are under pressure from higher wages, increased National Insurance Contributions, and the removal of business rate relief. As a result, 65% of businesses plan staff reductions, 55% anticipate cutting investment, and over a quarter expect to reduce operating hours.
• Cost Disadvantages
  Operating costs in Northern Ireland are among the highest in the UK – including energy, labour, and property, occasionally surpassing London rates. VAT at 20% further compounds challenges, putting the region at a competitive disadvantage compared to the Republic of Ireland’s 9–13.5% VAT rates.
• Support Initiatives
  Efforts such as the hospitality careers and skills committee created by Hospitality Ulster (consisting of leading industry stakeholders), HATS and the UK’s Wellbeing & Development Promise are helping address workforce issues. These initiatives promote training, inclusion, and anti-harassment policies but have yet to fully alleviate sector pressures and their efforts continue daily in collaboration with the industry.

Republic of Ireland: A Challenging Climate for Employers

• Workforce Decline & Closures
  The Republic’s hospitality sector continues to contract, with over 600 restaurants closing by August 2024 – each eliminating an average of 22 jobs. Younger workers are disproportionately affected, and the sector remains in recovery mode.
• Rising Operational Costs
  Labour costs are forecast to increase by around 20% by 2026, driven by minimum wage hikes, mandatory sick pay, pensions, PRSI contributions, and statutory holiday entitlements. Combined with VAT rising from 9% to 13.5%, smaller operators face intense financial pressure.
• Sector Size & Importance
  The sector directly employs over 250,000 people and supports a further 200,000 jobs via tourism. However, these figures mask growing instability caused by business closures and cost inflation.
• Policy Measures
  The government has introduced tax warehousing and temporary VAT reductions to ease pressure. An influx of migrant workers – now comprising more than 20% of the hospitality workforce has partially offset labour shortages, though retention remains a concern.

Rest of the UK: Large, Complex, and Under Strain

• Sector Scale & Role in Economy
  Excluding Northern Ireland, the UK hospitality sector employs roughly 3.5 million people directly and supports another 3 million indirectly. London and the Southeast serve as key employment centres.
• Labour & Cost Pressures
  Employer NICs rose from 13.8% to 15% in April 2025, significantly impacting employers. Brexit-related workforce disruptions have contributed to wage inflation – pub sector pay rose by 11.3% in 2025 alone – yet real earnings continue to lag behind inflation.
• Dependence on Migrant Labour
  Approximately 25% of hospitality workers in the UK are EU nationals. Post-Brexit immigration rules have exacerbated recruitment challenges, particularly in back-of-house and specialist roles.
• Government Response
  Timely support measures, such as business rate relief helped the sector recover more quickly than in Northern Ireland. However, ongoing cost pressures and labour shortages persist.

Overview

Key Insights:

• Northern Ireland: A robust recovery belies deep-rooted challenges. Severe recruitment issues and escalating costs risk reversing gains unless targeted support – particularly around VAT and employer contributions—is implemented.

• Republic of Ireland: The largest workforce base among the three regions, yet facing mounting closures and cost pressures. Government intervention has been proactive, but long-term sustainability is in question due to wage mandates and tax burdens.

• Rest of the UK: The most extensive and economically significant sector, with early policy responses aiding recovery. Nonetheless, the impact of Brexit, labour constraints, and rising contributions continues to stress the system.

Looking Ahead:

• Northern Ireland: A VAT reduction, expanded training pathways, and relief on employer costs are key to stabilising the sector.

• Republic of Ireland: Maintaining targeted tax supports and aligning wage growth with business viability will be critical.

• Rest of UK: Addressing labour shortages especially among EU nationals and managing tax pressures will determine future sector resilience.

A more collaborative approach is essential to secure the future of the industry and strengthen its ability to attract and retain a sustainable pipeline of talent.

Across all regions, hospitality remains both vital and vulnerable. Northern Ireland’s sector is resilient but constrained by structural costs.

The Republic of Ireland faces a shrinking base despite its scale. The rest of the UK, while vast, contends with post-Brexit complexities. A coordinated approach, balancing fiscal relief, workforce development, and immigration strategy will be essential to safeguard hospitality’s future across these islands.

Northern Ireland’s hospitality sector has shown admirable resilience but faces significant cost and staffing challenges that threaten its hard-won recovery.

References:

1. Hospitality Ulster, “State of the Industry Report,” 2024.

2. NI Department for the Economy, Labour Market Statistics, Q1 2024.

3. Irish Restaurant Association, “Hospitality Closures and Employment Impact,” August 2024.

4. Department of Social Protection (Ireland), “Labour Market Trends,” 2024.

5. UKHospitality, “Workforce Report,” April 2025.

6. Office for National Statistics (UK), “Employment in Hospitality,” 2025.

7. Revenue Commissioners (ROI), “VAT and PRSI Changes Overview,” 2024–2025.

8. Federation of Small Businesses, “Hospitality Sector Outlook,” 2025.

9. European Migration Network Ireland, “Migrant Labour in Irish Hospitality,” 2024.

10. House of Commons Library, “Impact of NIC and Minimum Wage Changes,” 2025.