Labour shortages must not be seen as simple case of business vs Brexit

It’s been a year since British business was told Brexit was a bit like moving house. “It’s a hassle at first, but you are upgrading”, said Michael Gove, now the government’s supremo for Levelling Up.

That phone meeting last October — where 250 business leaders were chastised for their “apathy” in failing to prepare for a Brexit deal that hadn’t yet been negotiated — was described as “disastrous” and “embarrassing” by people who took part.

Relations between the government and the business community could only go one way. Down, as it turns out. British business, like the rest of us, finds it has moved to a place where no Christmas turkeys are available and there’s an empty petrol station round the corner.

It’s not entirely clear whether, in the government’s eyes, the labour shortages affecting sectors from haulage to retail, food and drink and manufacturing are another failure by business to prepare, or all part of the grand plan.

Either way, the post-hoc justification of this as a strategy to secure an overdue boost to real wages and reach the sunlit uplands of Brexit just continues the mood music since 2016: a suspicion that business is backpedalling or trying to sully the ideological purity of the whole endeavour.

Which is odd. Disentangling the effects of leaving the EU from the jolt of the pandemic to the labour market is close to impossible, and the precise contribution of each is ultimately irrelevant. “I don’t think anyone understands the current demography of our labour market and where the gaps are” says Ian Wright, boss of the Food and Drink Federation.

But however this Brexit transition from “the low-wage, high-immigration model” (as business secretary Kwasi Kwarteng now puts it) was meant to happen, it wasn’t intended to be after 1.3m foreign-born workers left the UK as the result of a pandemic and as the reopening of economies after a series of lockdowns prompted international shortages of workers.

Sectors including haulage and meat packing where pay and conditions have been squeezed by a 24/7 supply model and powerful end buyers will indeed have to adjust to a different system. So will consumers who have grown used to the choice and just-in-time convenience that structure produced. But higher pay won’t magically fix the issue, as the government implies — and not just because it will be passed on in higher prices.

As Simon Wolfson, the Brexit-supporting boss of Next suggested last week, the UK seems to have secured the right and flexibility to craft its own immigration policy, only to opt for an ideological straitjacket instead. “We need the immigration system to start looking forward,” he said.

It takes about 9 months to qualify as an HGV driver, and Covid-related backlogs in testing are likely to take until next year to resolve. About 60 per cent of the shortages in the meat supply chain are in skilled butchery jobs, according to the British Meat Processors Association. The pandemic prompted a sharp fall last year in the numbers starting apprenticeships, which in any case take 18 months to complete.

Neither features on the UK’s list of occupations for which there are skills shortages. And the English language requirements in the post-Brexit visa system can also cause difficulties, according to industry sources.

Plans to issue 5,000 short-term visas, now valid until February rather than Christmas Eve, stacks up against an estimated 100,000 shortfall in drivers. Competition for workers means shortages can still show up in unexpected places, and smaller, less well-resourced companies are the ones most likely to suffer.

The idea that this is a lasting, targeted transition that will improve pay and conditions for those left behind in the pre-Brexit labour market is a dubious one. The shortages aren’t limited to low wage sectors for one thing — a hiring frenzy in professional services is also pushing up pay and prompting businesses to outbid each other on flexible terms.

Pay data is beset by measurement problems because of the pandemic. Jobs website Indeed UK found that advertised pay is growing in shortage sectors. But figures from the Office for National Statistics suggested that professional, scientific and technical jobs had the fastest year-on-year median earnings growth in August, beating sectors such as food service, education and construction.

Chancellor Rishi Sunak said in his conference speech Monday that he eschewed “mindless ideology” in favour of pragmatism. That’s something in post-Brexit Britain that, along with HGV drivers and butchers, appears in short supply.

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