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Wednesday, May 18, 2022

Where are Britain's missing million workers?

Where are Britain's missing million workers?

There could be as many as a million missing workers in the UK job market, experts say.

Latest figures suggest that the vast majority of livelihoods survived the end of the furlough scheme, designed to protect the economy from the ravages of Covid.

Fears of a huge spike in unemployment when the support was withdrawn have failed to materialise.

On the contrary: with vacancies at a record high of 1.2 million, many employers are struggling to cope with a shortage of skilled workers.

On Thursday, the government announced plans to get 500,000 jobseekers into jobs by the end of June, with those claiming Universal Credit having to look for jobs outside their chosen field more quickly or face sanctions.

According to the director of the Institute for Employment Studies, Tony Wilson, the problem is that the pandemic has caused the UK labour market to shrink.

"We're seeing unemployment falling, but we're also seeing employment quite a lot lower than it was before the crisis began," he told the BBC.

So how has that happened?


Well, since the onset of coronavirus, there has been a big rise in the number of people classed as "economically inactive" - that is, people who are not looking for jobs and are not available for work.

The Office for National Statistics (ONS) reckons that there are 400,000 more people in that category than there were before the virus hit.

Darren Morgan, director of economic statistics at the ONS, says that total "increased sharply" at the beginning of the pandemic, a rise he describes as "understandable".

"If you lost your job then, there was little point in looking for one, given the economy was closed," he told the BBC.


But since then, the number of economically inactive people has proved "far stickier" than the number of people out of work, he adds.

"We have not seen falls like we've seen in unemployment, and this is particularly the case for those over 50," he said.

That, of course, includes some people who have chosen to take early retirement, although others may feel the choice has been made for them.

Recent research by the Resolution Foundation think-tank also suggests that fewer young men are now economically active, perhaps due to fear of illness or suffering with long Covid, while more women have taken up roles due to the rise in flexible working.

Who else is economically inactive?


Tony Wilson of the IES says students are also a factor.

"A lot of young people decided to stay in education instead of entering the labour market a year ago," he said.

"But actually, more recently it's been growing because of longer-term ill-health" - a problem that includes people suffering from the after-effects of the virus known as "long Covid".

"All told, we think because the labour market was growing pretty consistently over the last few decades, the fact that it's now gone into reverse means that this gap, this half a million gap in employment, is even larger when you account for the growth in the labour market that we were seeing," Mr Wilson says.

"We think there's a gap of about a million people between what the labour market would have been like without Covid and where it is now."

Are there other factors?


Many of the labour shortages in particular sectors have been attributed to a decline in the number of foreign workers in the UK.

Because of a combination of Covid and Brexit, many EU nationals who worked in the UK have returned to their countries of origin.

Mr Wilson of the IES believes that the lack of migrant workers is responsible for the one-third of the shortfall in the labour market, while the rise in economic inactivity accounts for the other two-thirds.

Which sectors are worst affected?


Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation (REC), says the run-up to Christmas was "a touch-and-go moment" for many businesses, with Covid and recruitment problems coming together.

"It was a combination of the lowest candidate availability we've ever known and absence rates creeping up," she told the BBC.

Now Covid sickness rates are settling down, but shortages are still "a big sticking point", she says.

She singles out healthcare as one of the worst-affected sectors currently, with the NHS and private providers trying to woo a limited pool of skilled workers amid high demand for services.

"Sometimes the NHS will be paying more to retain staff, because the NHS and the private sector are competing on wages," she says.

Elsewhere in the economy, efforts to address the chronic shortage of lorry drivers have borne fruit, but at the price of attracting people from other sectors, such as fork-lift truck drivers or warehouse workers, she says.

"You have to look at the supply chain as a whole. There's a sense that we're robbing Peter to pay Paul."

And the beleaguered hospitality sector is under renewed pressure to raise wages, while not having had the chance to replenish cash reserves over the festive season because of Plan B Covid restrictions, she adds.

So what's the solution?


Ms Shoesmith says the answer lies in persuading the economically inactive to return to the job market.

But doing it properly, she says, will require a joint effort between the public and private sectors.

Jobcentres and recruitment agencies "working hand in hand" could rebuild the confidence of people who have dropped out of the job market and help them back into work, she adds.

"After the 2007-08 crash, there was a shared sense of purpose, a combined effort," Ms Shoesmith says.

"Jobcentres can get people in, while recruiters can offer deep understanding of a sector," she says. "We've done it before and we can do it again."

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