The growing labour and skill shortages across the economy of the United Kingdom are fundamentally down to the explosion of the UK’s demographic time bomb.
The UK has an ageing population with an ageing, shrinking, domestic workforce with, just as importantly, an ageing, shrinking, domestic business owning class.
More people are retiring from the UK labour market at one end than are entering it at the other.
Freedom of Movement mostly defused the UK’s demographic time bomb.
Boris Johnson’s Hard Brexit, freely endorsed by Keir Starmer’s Labour, armed the bomb and it has now exploded.
Over a decade ago, civil servants as lowly as Executive Officers in the Department for Work and Pensions, like myself, were briefing Jobcentre colleagues and external partners across the country about the consequences for the UK labour market of the bomb exploding.
We spoke in Birmingham and Solihull of matters like recruitment, retention, returners and (mid life) career switchers in the context of an ageing workforce.
We had a particular interest in encouraging men to consider a career in childcare wherein back then only 2% of employees were male.
We contrasted that figure with the 8% of Heavy Goods Vehicle drivers who were female.
As an aside, one of the chaps working in childcare in Birmingham had lost his job at Rover in 2005. And he was much happier in his new career than he had ever been in any previous job in his life.
When he had left school, men from his class background were expected to go to work in a factory and, in his case get a job on the track at a car plant.
Just over 12 years ago, as a DWP official, I sat in a meeting at the Queen Elizabeth Hospital here in Birmingham with colleagues and National Health Service Human Resources staff.
We were told by one of the NHS staff present that nationally they had estimated they would need to recruit one in two of all school leavers at 16 just to maintain their head count.
Today, we have 100,000 unfilled vacancies in the NHS.
I am inclined to snigger when a Johnson or a Starmer talks about not just filling those vacancies, but expanding the total number of staff employed in health and social care in the UK.
5% of all those working in the NHS in the UK in August 2019 were EU citizens. That figure rose to 10% in the West Midlands Region of the NHS.
“Nearly half (48 per cent) of advertised consultant posts across the UK were left vacant last year (2020) – up from 36 per cent in 2013. Half of the unfilled posts were due to nobody applying for them and a third were down to a lack of suitable candidates.”
You cannot train up, say, a UK based HGV driver workforce in the longer term (in competition, by the way, with every other sector of UK economy facing growing labour and skill shortages) when the people you want to train up in UK were not born in UK 20, 30, 40 … years ago.
And, it takes a minimum of nine months and eighteen years in the UK to bring a raw labour unit to the market.
“In the long run we are all dead.”
John Maynard Keynes
The most significant short, medium and long term answer to the UK’s labour and skill shortage problems, but not the only one, was and remains foreign born labour to substitute for the native-born workers who were never born.
Alternatively, the population of the UK accepts a poorer standard of living for the foreseeable future and that might include some having to work longer than now, if the UK Government increases the State Retirement Age as one response to the explosion of the UK’s demographic time bomb.
Unsurprisingly, this was an aspect of Brexit that the Leave Campaign avoided mentioning during their campaign in 2016, although I guess cakeism sort of covered it then and up until last December.
We were once promised all the benefits of the Single Market, even when we were out of the club.
Freedom of Movement in a labour market made up of 32 states now 31, with us outside, worked to mostly defuse the UK’s demographic time bomb.
Ending Freedom of Movement mostly created the labour and skill shortages the UK economy is now facing.
There was a straw in the wind as to what might happen.
Despite Farage’s, McCluskey’s and Corbyn’s claims to the contrary, Eastern European building workers did not drive down pay, terms and conditions in UK construction.
According to Markit monthly industry surveys as far back as mid 2017, even with migrants in the mix (cue groan at niche pun) the demand for labour in UK construction was exceeding its supply, forcing employers to raise pay, terms and conditions as they competed for scarce labour and skills.
Yet, in 2021, Starmer and Johnson talk about building back better or similar.
From where will they recruit sufficient bricklayers, electricians, plumbers, roofers, labourers, carpenters, plasterers, surveyors, architects … and HGV drivers to try to make their visions a reality?
89.7% of all the businesses in the UK employ nine staff or fewer.
61% of all the jobs in the UK economy are in Small and Medium-sized Enterprises.
If one routinely employs nine staff and only has just the one vacancy to fill then that equates to 11% of one’s work force.
If one is unable to fill that job for any length of time then one’s business will suffer and that might lead to the laying off of staff and possibly, in an extreme case, going out of business with all that entails for suppliers and those reliant on a business for employment and income.
“The loss is not just … jobs and lost growth but reduced corporate and individual taxes going to government. Skills. Knowledge. The jobs and turnover in company suppliers and service providers. The innovations. The lunches and the after work beers putting money into small businesses locally.”
The labour market problem is decades old.
The key policy solution was migration and, courtesy of the Single Market a relatively hassle free process of moving between countries for work and to set up or take over an existing business.
The negative consequences of a Hard Brexit and, specifically, the end of Freedom of Movement on business formation and ownership in the UK have yet to really surface in the debate.
Some UK businesses are seeing a downturn in sales revenue as completing the paperwork required of a company based in a third country, trading with customers in the Single Market takes time away from making money.
Others companies may well close, because a business model designed for being in the Single Market and Customs Union may not be adapted to the new reality of being outside of both.
And, courtesy of the demographic time bomb, some businesses will cease trading, because their ageing and/or infirm owners cannot be asked to bother with dealing with all the new forms etc, particularly after having had to cope with the stress of preparing for two No Deal Brexits and coping with Covid.
It is a fairly standard storyline in Endeavour or Midsomer Murders, the older generation bemoaning that their offspring are not interested in taking over the family business.
In 2021, it is not unusual to find that those offspring were never born.
And in 2021, there are also fewer migrants to whom one might sell one’s firm than was the case a few years ago.
Freedom of Movement provided migrants who were able to buy businesses off UK company owners, retiring from business for one reason or another. Migrants also set up new businesses in the UK.
How many migrants who set up new enterprises or bought existing ones in the UK, courtesy of Freedom of Movement, will now remain in the UK and, if they decide to leave to whom will they sell their businesses?
Some businesses are taking on new staff to handle the paperwork required to continue trading with customers in the Single Market. These jobs are unremunerative in that they have been created to just try and maintain sales not increase them. They eat into the bottom line, reducing a company’s profits.
The key stakeholders back in the 2000s knew that migration was the most significant answer to the demographic time bomb and still do.
However, I do detect a degree of panic, even a few displays of cognitive dissonance, amongst some informed people as to the consequences of admitting where things are going whilst Priti Patel remains Home Secretary.
Her unique selling point in any future Tory leadership race in which she may choose to take part will be her stance on (im)migration.
The obvious and only major practical policy solution has to be a replication of Freedom of Movement and, in particular, the ability to put down roots in the UK so as to live and work here and not just be treated as unwelcome, but necessary guest workers, brought in as and when with Cinderella style work visas.
The approach the Government is adopting towards issuing emergency three month visas will only make working in the UK attractive to the desperate for work; the not especially competent and those unaware of the toxic environment that has been created in the UK since 2016 not just for migrants and immigrants, but BAME folk born and brought up here, too.
Beggars, of course, cannot be choosers so recruitment standards may have to drop, if all the visas the Government is planning to make available are to be used by employers between now and midnight on 24th December.
Patel will not wear any resurrection of Freedom of Movement and neither will Labour, according to Rachel Reeves, who, incidentally has crafted in her policy of buy, make and sell more in Britain (to boost British exports!) a wheeze almost guaranteed, if enacted to drive a further wedge between the UK and the EU as well as antagonise the USA and most other trading nations around the world.
Priti Patel’s policy of growing our own domestic workforce does not, incidentally, extend to the UK’s armed forces.
The rules for overseas recruitment by the Ministry of Defence have been relaxed since 2016 to address labour and skill shortages and now 10% of the regular army are foreign mercenaries.
When will the dictatorship of the dwindling number of hardcore Leave voting, Britain (really England) First fanatics end, given it has to date, survived two General Elections since 2016?
When will Conservative and Labour politicians speak truth unto what now amounts in 2021 to a minority of the electorate?
The demand for labour in the UK exceeds its domestic supply.
Increasing pay may move people around the labour market, but it will still leave the overall number of vacancies, unfilled.
There are not enough of us of working age, who were born in the UK, to look after the ageing of the UK, who were born in the UK, and do all the other necessary things to keep our society and the economy of the UK functioning.