The Guardian view on Britain’s missing workers: they may never come back
As the UK sidles gingerly past the pandemic, a big mystery looms. Where have all the employees gone? Unemployment is around its lowest level since 1974 and well over a million positions are vacant. There are plenty of jobs to help offset those eye-watering fuel and grocery bills yet, since Covid hit these shores, 565,000 Britons have dropped out of the workforce. They have become what statisticians define as “economically inactive”, which is to say of working age yet neither in a job nor wanting one.
Even as trains sit in sidings, Christmas post goes undelivered and nurses form picket lines, here is a different story about workers – one that gets barely a mention. The country’s workforce has shrunk, with serious implications for employers, inflation, tax revenues and economic growth. Yet the policymakers paid to analyse such phenomena have no idea why it has happened. The governor of the Bank of England, Andrew Bailey, accepts that the situation is “very unusual”, while one of his deputies, Dave Ramsden, says: “It’s not clear what is driving this participation puzzle.” A giant shrug from Threadneedle Street then, while ministers waited until last month to launch an investigation.
They have been beaten by a report this week from a Lords select committee, whose members include Mervyn King, the former head of the Bank, among several leading economists. It argues that the biggest contributor to this rise in inactivity is people over 50 taking early retirement. As one economist told the panel: “They are gone and they are not coming back.” Others, such as the Trades Union Congress, have singled out the role played by long Covid, although that wouldn’t explain why the UK’s continued rise in economic inactivity has not been matched in other rich countries.
The UK is also the only state to have exited the EU, and the change in migration systems must also be a huge factor. Ministers now turn away low-paid migrants, while opening their arms to topearning migrants. That leaves a lot of farms, bars, hotels and restaurants begging for staff. Many will go under.
Ask those fresh from their leaving dos why they went, and the answer, as this newspaper has found in its recent series, is that work doesn’t work. Pay cheques don’t cover childcare costs. The Office for National Statistics reported this week that over one in four former healthcare professionals left because of stress, while those exiting social care preferred to focus on caring for their families.
For decades, successive British governments have boasted of their easy come, easy go labour market, in which young (and often highly skilled) workers could be imported to make up any shortfall. Truth be told, that system never worked as well for employees as it did for employers, which is why wage growth has been so sluggish for so long, and now the entire model is under threat. Perhaps inflation will force some of the UK’s newest retirees to rejoin the salariat, but in the meantime the policymaking establishment is left with a huge problem it has barely studied – because it ignored all the warning signs.