Drivers’ wages rising as diesel prices drop

A steep fall in fuel prices has eased financial pressures on British hauliers, but many may face a commensurate increase in employment costs as competition for competent, qualified drivers increases.

While diesel costs for hauliers rose over 61 per cent in the last 10 years, recent declining crude oil prices, and a forecourt price war initiated by supermarkets desperate to get British shoppers to forsake the likes of Aldi and Lidl, have combined with a four-year freeze in fuel duty increases to significantly reverse the trend.

As of 19 January, according to official figures from the Department of Energy & Climate Change, average diesel prices had reached 114.3p/litre including VAT – a drop of more than 15p/litre in three months, and their lowest level since early 2010.

But as one cost falls, another rises. Operators report that the economic recovery, the onset of the Driver CPC and an ageing demographic have also increased competition for drivers. Vacancies in the transport and storage sector have risen over 26 per cent in the last year according to the Office for National Statistics (ONS) Vacancy Survey, and stood at 26,000 in the period September-November (the last for which data was available as Transport Operator closed for press).

Wages have already risen. ONS data shows average weekly earnings in the transport and storage sector last October were up to £547 from £542 in October 2013. The Road Haulage Association reports that its members increased drivers’ wages by two per cent in 2013 and three per cent in 2014.

Even when demand for drivers was still falling in the aftermath of the recession, there was still a declining pool in unemployed drivers for hauliers to call upon.

Back in 2008 when the recession bit there were some 306,000 LGV drivers in employment and 8,880 LGV drivers unemployed. The number of drivers employed declined to 255,000 in December 2013, but the number of qualified drivers who were unemployed fell far faster in percentage terms to just 2,875. Now, with demand for drivers increasing again, the pool of unemployed drivers is being emptied very rapidly.

The number of new drivers is also in decline. In 2007-08, 70,766 LGV driving tests were taken with 32,779 passes. In 2013-14, 48,283 tests were conducted and 26,224 candidates passed. The average age of the driver population is rising, and is now in the mid fifties. Staff in transport offices are likely to be significantly younger than the drivers they supervise.

Some figures in the industry think that the situation can be resolved by recruiting more women. So far, all attempts to do this have failed. 4,305 females attempted an LGV driving test in 2007-8; by 2013-14 that number had fallen to just 3,290. The one consolation is that at 58.6 per cent, the female pass rate is rather higher than the male pass rate of 54 per cent.

Road Haulage Association chief executive Richard Burnett said: ““Right now, we are 45,000 drivers short. If the issue is not urgently addressed, in 12 months’ time that figure will increase to 60,000.”

James Hookham, the Freight Transport Association’s (FTA) managing director: management and policy, said: “We are facing a long-term challenge to attract and recruit sufficient people to professional driving. We need to up our game in recruitment practices and start addressing some deep-seated problems in the industry.

“We also need to ensure government and other agencies are on our side and that we make best use of the support and funding that is already available.”

Long-term, a combination of increasing casualisation, the rise of questionable practices such as agencies forcing drivers into ‘umbrella’ schemes, and pressure from low-cost hauliers and drivers from Eastern Europe forcing wages down, all combined to make driving an increasingly less financially rewarding career.

Meanwhile, the cost of acquiring a licence, poor driver facilities and sector image, medical requirements and a lack of understanding of the industry, have all been cited by FTA as reasons that fewer young people are considering driving as a career.

The driver shortage is not confined to the prosperous south-east. Stiller Warehousing and Distribution, which is based in Newton Aycliffe, County Durham, spent more that £1 million on new vehicles at the end of 2013, primarily to service a new contract with a food packaging supplier, but is having to find novel ways of recruiting drivers for them.

Managing director Paul Stiller said: “We’re now recruiting at all levels, including lorry drivers. Some of our staff will transfer and some may transfer from other areas, but we’re definitely recruiting more drivers.

“We recently recruited a driver from Romania through an agency and it has worked really well.

“Importing drivers direct from Europe is possibly something we’re going to do regularly, as there is a shortage of drivers locally. It seems to be a little bit better now, but what we’re really lacking is experienced drivers.”

Stiller has also launched its own training programme to help its inexperienced drivers, some of whom have been recruited through the armed forces Career Transition Partnership Scheme.

Charles Dall’omo, managing director of nationwide training provider Train Together, told Transport Operator:  “All of our clients, whether they are large national, regional SMEs, micro businesses (1-10 employees) or temporary agency are finding it very challenging to recruit the number of drivers they require.

“The next challenge for companies at the moment is holding onto newly recruited drivers. It’s really competitive out there at the moment and drivers are being tempted to other companies for an increased hourly rate.

“Improvement to wages is a high priority for many of our clients. They simply can’t attract or keep drivers without increasing the hourly rate. The main problem they face is that margins are still tight.

“Yes, we’re seeing big drops in the price of fuel at the moment; however, there’s not enough confidence that fuel prices will remain low for a sustained period of time.

“If they did improve the hourly rate, there’s no going back. The key ‘driver’ (pun intended) for wage improvement at the moment is the driver shortage. The problem with this is that regional SMEs and micro business will not be able to keep up in this arms race.“

In mid-January, the prime minister called for companies to use profits from falling oil prices to increase workers’ wages.

Speaking to reporters in the White House while on a two-day visit to the USA, David Cameron said: “Obviously I want to see companies’ success passed through in terms of wage increases.

“It has to be done in a way that’s affordable, and in a way that companies can continue to grow, we need to see productivity increase.”

Mr Cameron said companies: “that can afford to pay the living wage should”.

Promoted by the Living Wage Foundation, the living wage is currently calculated as £9.15 an hour in London and £7.85 in the rest of the country.