Labour shortages: the ‘most urgent problem’ facing the UK economy right now

Britain is currently in the grip of an ‘employment crisis’

Closed sign on a pub
(Image credit: Chris J. Ratcliffe/Bloomberg via Getty Images)

Anyone going on a UK break this month would do well to book pubs and restaurants well in advance, said The Sunday Times – and even if they get a table, they shouldn’t expect a full menu. It is more than a year since the last lockdown, but the hospitality industry is still facing acute labour shortages – and it’s not the only one.

Britain is currently in the grip of an “employment crisis”: there are 1.3 million job vacancies, and for the first time, there are not enough people looking for work to fill them. This is partly down to Brexit: it has “contributed to the exodus of 200,000 EU citizens” in the past two years; but a greater number of people – 450,000 – have simply left the workforce since 2019, and are now “economically inactive” (neither in work, nor looking for work).

You might assume such people are “young flâneurs”, but in fact, this group is mainly made up of over 50s. When the ONS surveyed some of these leavers in February, almost half said they’d left their jobs of their own volition, and only two-fifths said they’d consider going back to work.

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The shrinking workforce is “the most urgent problem facing the UK economy”, said Chris Giles in the FT. In total, there are 900,000 fewer workers today than the Bank of England expected before Covid struck. Its governor, Andrew Bailey, has warned that labour shortages are driving up prices and wages (as employers feel obliged to concede to pay demands), thus contributing to his struggle to bring down inflation.

‘UK-specific problem’

Most worrying is “that this is a UK-specific problem”. We have “the most persistent post-pandemic drop in employment of any G7 country”. And while some of it may not be the government’s fault, the fact that many of those who’ve left the work force are long-term sick is a black mark on its record, underlining the broader harm caused by the UK’s high levels of long Covid and record NHS waiting lists.

It’s a nightmare for employers, said Tom Calver in The Sunday Times. Not only are they unable to get the staff with the skills they need, some are having to turn a blind eye to lower standards from the employees they have.

‘Where are the schemes?’

What is infuriating is that the government is not doing more to tackle the issue, said Emily Sheffield in the London Evening Standard. Where, for instance, are the schemes to lure over-50s back to work, perhaps part-time?

The government’s ability to control immigration policy was hailed as a Brexit win; so why hasn’t it tweaked the visa rules to encourage more overseas workers to come to the UK to fill the gaps? We’ve heard a lot about no longer relying on cheap labour, and the need to “skill up”, but those are reforms for the long-term; this crisis needs addressing now.

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