UK unemployment is close to its lowest level since the mid-1970's
This is due to many businesses and sectors experiencing a shortage in skills to fill roles, finding enough staff to fill roles and increasing numbers of people quitting the UK workforce altogether.
The rise of this economic inactivity (working age adults who are neither in a job nor looking for a job), is one of the biggest challenges facing the economy.
More than 9 million people between 16 – 64 years are not in the current labour market, this is mainly due to:
- Students
- Those with long-term health conditions
- Early retirees
- Carers for young children or elderly relatives
Brexit and the ‘great retirement’ are two of the main influencers contributing to over 600,000 less workers in the UK workforce. Plus, since the covid pandemic more than 2.5 million working-age adults are now off long-term sick.
Estimated 330,000 short due to Brexit
The UK is experiencing a shortfall of 330,000 workers, since we ended the free movement of labour in the EU, contributing to shortages in lower-skilled sectors including logistics, construction and hospitality.
It is estimated that since Brexit we have lost 460,000 EU workers, and have gained 130,000 non-EU workers, leaving a shortfall of 330,000.
The lower paid sectors are experiencing the largest hit, with ‘transportation and storage’ experiencing an 8% decrease in workforce, ‘accommodation and food’ with a decrease of 4% and ‘wholesale and retail’ with a 3% decrease.
The affected sectors, experiencing shortages in Lorry Drivers, Construction workers, Agricultual Labourers and Hospitality Staff have asked the Government to relax the visa regime by expanding the “shortage occupation list”, but haven’t had much success.
What are the rules now?
Applying for a work visa within the UK now goes on a points-based system, where skilled employees earning more than £25,600 per year or £10.10 per hour, can obtain them.
The 'Great Retirement'
The UK are experiencing a shortage in workers caused by a ‘Great Retirement’ due to the Covid-19 pandemic. Since the start of the pandemic 565,000 more people have become economically inactive.
A study conducted by the Office for National Statistics (ONS), found that the majority of 50-64 years (71%) have decided to retire early since the pandemic, as they own their homes outright.
This had lead economists to believe this boom in early retirement suggests a growing number of over 50’s are ore likely to be debt free and feel financially secure enough to leave work altogether.
Plus, 57% of people in their late 50’s, who have left the labour market since 2019, told Business Leader that they wanted to retire to look after their family.
A representative from the Department for Work and Pensions said:
“Older workers are a huge asset to our economy and jobs market. That’s why we are investing an extra £22 million in employment support for the over 50’s – expanding our Job Centre Mid-Life MOT service and providing tailored support through our Older Worker Champions.”
What's the solution?
The rise to National Minimum Wage, the current cost of living crisis and cutting benefits from Jan 31st, was expected to see an increase of those returning or joining the labour market, however this doesn’t seem to be the case, which has raised the question to economists ‘how are people managing to cope with the cost of living emergency?’.
A recent inquiry conducted by economists found that there is a mixture of reasons for people not returning to work, including:
- The lack of affordable childcare
- Employers refusing to be flexible working hours
- Some people don’t want to work altogether
- Some people would work if there circumstances allowed them to
- Inadequate support for those with health conditions and disabilities
