U.K. Labor Shortages Rooted in Loss of Workers During Pandemic
The sheer number of people who have left the U.K. workforce since the pandemic struck.
(Bloomberg) -- The sheer number of people who have left the U.K. workforce since the pandemic struck is leaving companies struggling to find the staff they need.
Figures published Tuesday show there are around half a million fewer people who are either in employment or actively looking for a job than at the start of 2020. The overall participation gap, -- an estimate of the number of people who would have been available to work had the pandemic not happened – is closer to a million.
For companies and the wider economy, the challenge is to get some of those workers back. Labor shortages in sectors from IT and computing to hotels and catering are forcing firms to ramp up wages. Many are responding by increasing prices, fueling a surge in inflation that is expected to prompt the Bank of England to increase interest rates early next year.
So where have all the workers gone? There are about 200,000 fewer European Union nationals living in the country, government estimates show. Meanwhile, over 375,000 more 16 to 64-year-olds are inactive – neither employed nor seeking work. Inactivity hit almost 8.75 million in the three months through October, close to a record high.
The increase in inactivity during the pandemic has been driven by young people, with the student population up by more than 200,000. There are also many more declaring themselves retired or long-term sick, with the latter reflecting the toll taken by the pandemic on the well-being of Britons.
In one encouraging sign, there are now fewer “discouraged workers,” people who are not looking for work because they believe that no jobs are available.
That suggests people are finding it easier to get work. The Office for National Statistics data showed the number of people out of work for up to 12 months fell in the latest three months.
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