A Changing World
Ever since EU expansion enabled workers from all over Europe to work in the UK, labour supply has not been an issue. There were sufficient people able to work to fulfil the country's needs.Nearly a year on from Brexit, the picture could hardly have changed more dramatically. Shortages of staff are being widely reported in all sectors, on account of the decision taken to bar all immigration for unskilled and semi-skilled workers. What are the consequences?
The immediate winners are those who are now able to command much higher wages as demand is rapidly exceeding supply. We are seeing instant wage increases of up to 25% that organistaions are prepared to pay in order to attract staff. It is hard to see how that might play out in the longer term; if people can earn £11.00 an hour for unskilled work, there will be even less incentive for people to work in care homes or as hospital porters for around minimum wage.
The losers are the consumer, who will ultimately pay for these increases, companies that simply cannot afford higher wages, and the country as a whole as inflation takes root. Not to mention those sectors that simply cannot attract workers, even with increased wages.
Government is so far pushing the line that these shortages will be temporary. Unless our approach to immigration changes radically, and quickly, they will not. Before the pandemic, there was lower unemployment than at any time since records began. That was with unlimited EU immigration. We now have zero immigration (for lower skilled positions). The effect on an ageing population will be chilling as we become the only Western nation that has ever attempted to build an economy in the absence of migrant labour. Even a prominent right wing think tank has described this approach as "economically illiterate".
The pandemic has dominated the news but the yawning and increasing gap between labour supply and demand can only get worse as long as we continue with the approach that has been chosen. This is one that will not go away.