Christmas supplies at risk as staff shortage expected to last to 2022
It is no surprise that there is a shortage of lorry drivers – we simply don’t pay them enough
SHOPS are at risk of being left with empty shelves in the run-up to Christmas after recruiters warned that the labour crisis gripping the economy is set to drag on until next year.
Lorry drivers are in particularly short supply, causing stock shortages across the construction and hospitality industries, while food manufacturers, pubs and restaurants are also struggling to find staff, according to the Recruitment and Employment Confederation (REC).
Neil Carberry, its chief executive, warned that the labour shortage may also cause delays to online orders and force retailers to increase delivery costs.
It came as Britain’s biggest retailers warned that stock levels have fallen to a record low amid a drop in imports and the jobs crisis. Meanwhile, Mcdonald’s said it had been forced to remove milkshakes and bottled drinks from its menu due to supply chain upheaval.
The REC said the jobseekers available are often in the wrong locations or have the wrong skills. Furloughed hospitality workers face a lack of demand in
London even as there are shortages in tourist hotspots such as Cornwall.
Mr Carberry added that the labour market could face pressures for the next decade as the baby boomer generation retires and Brexit limits migration from elsewhere in Europe.
Last month, Tesco said it would offer lorry drivers a £1,000 joining bonus in an effort to combat the shortage.
However the British Meat Processors’ Association warned this risks simply poaching drivers from other parts of the supply chain, adding that a shortage of Christmas products such as pigs in blankets “now looks inevitable”.
Separately yesterday, a survey of retailers published by the Confederation of British Industry (CBI) revealed that stocks in August plunged to the lowest level since 1983, while retail prices rose at the fastest pace since November 2017.
Alpesh Paleja, an economist at the CBI said: “There are signs of operational challenges still biting, with stock levels reaching another record low and import penetration falling. Disruption is being exacerbated by continued labour shortages, with many retailers reliant on younger employees currently awaiting their jab.”
Builders have also warned that shortages of timber, metals, electrics and paints could continue into 2022.
The problems are so widespread that HSBC has cut its GDP growth forecast
‘Jobs are offshored, either to overseas production or to incoming migrant labour’
As you sow, so shall you reap, one Remainer friend gleefully said to me the other day on reading of empty supermarket shelves, that Nandos has been forced to shut 50 restaurants because of supply shortages, and that Mcdonald’s had stopped selling milkshakes and bottled drinks because it can’t get hold of the stock.
My own particular experience this week of these shortages was the inability to buy a new pair of bicycle clips (don’t ask). “Just can’t get the supplies”, said the man at Evans Cycles, as if driving another nail into the coffin of physical retailing. It is, of course, still perfectly possible to buy them on Amazon.
“We said this would happen, and it has”, said my friend. Up to a point he’s right; Brexit has made trade with traditional sources of supply more difficult and expensive but, much more importantly, it has also accentuated the shortage of HGV and delivery drivers on whom we rely to keep the economy ticking over.
The entirely self-inflicted wound of the “pingdemic” plainly didn’t help either but truckers tend to be solitary people so this would not have been as big a factor as in other walks of life. In any case, the requirement to self isolate if in contact with a Covid carrier has now gone, but it doesn’t seem to have made any difference to the shortages.
These are beginning to have a marked impact on the recovery, with growth slowing worryingly into the summer months. Big staff shortages are emerging across the piste of service industries, but they are particularly acute in road haulage and delivery.
As it happens, the problem long predates both Brexit and the pandemic. Staff shortages have been a challenge for this industry going back years, with an estimated 60,000 job vacancies even before Britain left the EU. But road haulage operators did at least enjoy an apparently inexhaustible supply of European drivers, which considerably eased the problem.
About 35,000 of these truckers are reckoned to have returned home after Brexit. Driving a lorry is not on the Government’s “skilled worker, shortage occupation list”, and therefore doesn’t qualify for a work visa. Then along came the pandemic, which hugely increased the demand for home delivery, and therefore drivers. The problem was compounded.
That Brexit has played its part is undeniable. But there is also a sense in which the labour shortages it exposed were actually part of the rationale for leaving the European Union in the first place. There will be no buyers’ remorse among many Leave supporters if they are for a time deprived of their Mcdonald’s milkshakes; indeed, if it helps to drive up wages, it might be positively welcomed.
We need to be a bit careful arguing that reducing the supply of labour will automatically raise wages, which though it might seem a matter of common sense, is not supported by economic theory.
The so-called “lump of labour fallacy” holds that there is never a fixed amount of work or jobs in an economy. Far from damaging wages, migrant labour can improve productivity, innovation and overall economic activity, as well as reduce incentives for offshoring and business closures, thus creating more jobs.
But though possibly true on a whole economy basis, lump of labour theory is not much comfort if you happen to be a lorry driver. Relative to other forms of employment, road haulage has seen its earnings power steadily eroded over the past couple of decades.
If you want to know why there is a shortage of truck drivers, it’s actually only tangentially related to Brexit; rather it has much more to do with the fact that the profession is in general badly paid, entails often long and unsociable hours, is hard and responsible work, requires quite a lot of expensive training, and is poorly valued by society at large. It is no accident that HGV driving is an ageing profession; understandably, the young are reluctant to fill the vacancies being left by their retiring forebears.
Like much so-called “low skilled” labour, lorry driving has been a particular victim of globalisation, and of the accompanying demand among consumers for ever lower prices. Road haulage companies typically operate on wafer thin margins of as little as one to two per cent. The squeeze on costs they’ve experienced at the hands of the major supermarket chains is passed on in the form of squeezed wages. Business models that rely on stealing market share from rivals by constantly grinding down on wage and other costs are unlikely to be sustainable in the long run.
Truckers are just the protruding tip of the iceberg; most low skilled work has found itself similarly squeezed by globalisation and technology. Where workers resist, the jobs are offshored, either to overseas production or to incoming migrant labour. We’ve traded our dignity and self reliance for our addiction to low prices. This has in turn created the illusion of a low inflation environment, allowing the politicians to sponsor cheap credit as a substitute for sustained wage and employment growth.
There are admittedly a few green shoots beginning to poke their way through the resulting desolation. Lorry driving has been granted full apprentice status, which ought in time to give the profession the status it deserves; the DVLA has also begun finally to shift the backlog in HGV licences that has been allowed, unforgivably, to accumulate during the pandemic.
To ease the immediate problem, the Government may have to expand the current visa system, at least on a temporary basis, to include lorry drivers. This would be a climbdown for ministers, who insist that for now it is not being considered. But it would seem preferable to bringing in the army, which is also being talked of as a possible solution.
As for the wider problem of poor pay, reversing decades of wage attrition will carry its own costs. One consequence of the greater economic resilience our politicians now almost universally aspire to is almost bound to be higher prices. Everyone is in favour of higher wages, until, that is, they realise it entails higher inflation. Yes indeed; as you sow, so shall you reap.