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The UK has a problem with jobs. There are simply not enough workers to support the economy going forward, and many employees are increasingly upset that inflation is emptying their pockets.
The problem escalated on Tuesday, June 22, when thousands of railway workers went on strike for demands for better pay and working conditions – the largest railway protest in 30 years – shutting down large parts of the network. Several strikes are scheduled for Thursday and Saturday, according to ziare.com.
A separate strike by London Underground workers also shut down metro services.
Rail strikes could continue for months, said the National Union of Rail, Maritime and Transport Workers, and teachers, nurses and other workers could follow as their wages fall following rising inflation rates now projected to exceed 11% towards the end of the year. In addition, a union representing 1.3 million public sector workers said last week that it was “ready to strike”.
This month’s rail strikes alone could cost the tourism, leisure and theater industry more than £ 1 billion, Kate Nicholls, CEO of UK Hospitality, said last week.
Maggie Simpson, director of Rail Freight Group, told CNN Business that she expects to be transported by train with 30-40% less freight during the week, with critical products, including fuel and supermarket products, prioritized for delivery. She said she was “very concerned” about the loss of confidence among companies, which increasingly preferred railways to shipping their goods.
A summer of strikes would deal a severe blow to an economy that has slipped in the opposite direction. But the activity was already stopped in industries such as aviation, hospitality and social assistance due to a record number of vacancies – 1.3 million.
Mandira Sarkar, owner of Mandira’s Kitchen, a food and catering company in the south-west of England, describes the labor shortage as a “slow death” for her six-year business. “It was a complete nightmare – we are on our knees, because we simply can’t find it personally,” she said.
Last week, Gatwick, an airport in south London, said it would reduce its summer schedule by up to 13% in July and August because it had not found enough workers.
The airline industry reduced jobs during the pandemic as passenger demand fell and it struggled to hire and train enough workers to cope with a sharp drop in passenger numbers in recent months.
EasyJet, a low-budget airline, said Monday it would reduce its summer schedule to about 90 percent of 2019 levels in part due to the Gatwick disruption.
But it’s not just a post-pandemic problem. Brexit has put an end to the free movement of labor between the United Kingdom and Europe, making it much harder for British employers to access a substantial source of workers.
Sarkar said she “desperately” needs to hire two full-time people to work in her kitchen and blames the double impact of Brexit and the pandemic on keeping workers away.
The lack of staff has forced her to turn down customers, so much so that Sarkar expects her revenue this year to be 40% lower than in 2021.
“All the people in Eastern Europe, all the people we had, who worked for the hospitality industry, disappeared during the pandemic, leaving this huge hole,” she said.
The labor shortage in the United Kingdom is particularly severe. According to the Organization for Economic Co-operation and Development, the United Kingdom was the only country in the “Group of Seven” where the share of able-bodied people fell between 2020 and 2021.
The OECD also estimates that the UK economy will stagnate in 2023, making it even more different from the G7 economies, with the forecast for others to grow.
The Learning and Work Institute, a think tank, estimates that around one million Britons are out of work. Its CEO, Stephen Evans, told CNN that the country “withstood relatively well in terms of employment at the beginning of the pandemic, due to the holiday scheme and other forms of support.”
“But since then we have seen this exit from the labor market,” he added.
Evans said most of that million is explained by workers over the age of 50 and those with long-term health problems who quit their jobs.
About a third can be attributed to low population growth – including lower net migration – and about a fifth of young people who spend more time in full-time education.
While unemployment in the United Kingdom has returned to pre-pandemic levels of 3.8%, this measure only captures the number of people actively looking for work. Government policy tends to focus on lowering that number, Evans said, but now it should reorient itself to re-employ those who have left work completely.
Why comparable economies have not seen the same exodus of workers is not yet clear, said Tony Wilson, director of the Institute for Employment Studies.
“The UK is one of the very, very few countries in the world that has seen what appears to be a fairly structural shift in participation,” he said. Wilson speculated that Britain’s pension freedoms – workers can use their savings for pensions from the age of 55 – could be a factor.
The Institute for Fiscal Studies found that retiring workers between the ages of 50 and 69 were the main driver behind an increase in economic inactivity, contributing two-thirds to the growth of the last two years.
Of particular concern is the growing number of people leaving the workforce due to the disease, Wilson said. Whatever the reason, the trend shows few signs of improvement. “It’s pretty gloomy indeed,” he said.
Brexit is biting
Britain used to have a trained group of door workers, but now it is much harder for European workers to get through the door.
“Greater migration into the European labor market has helped alleviate the shortage of workers in the past – that doesn’t exist now,” Wilson said.
The care sector for the elderly, which has long suffered from staff shortages, has been particularly hard hit.
Dr Sanjeev Kanoria, co-founder and owner of Advinia Health Care, one of the country’s largest healthcare providers, explained that the pandemic hid the “true impact” of Brexit on its industry.
Kanoria, which has about 3,000 employees in 37 dormitories, said it has at least 10 percent of vacancies.
This year, he expects to pay recruitment agencies around £ 10 million to find both permanent and temporary staff – more than three times more than he would normally spend.
People in Eastern Europe traditionally accounted for about one-fifth of its staff.
“It’s really gone down, it’s gone down to almost 0% now… we just don’t have anyone in Europe anymore,” he said.
In addition, rising prices keep Britons away from jobs in lower paid sectors.