Rail strikes and labor shortages hurt Britain’s economy

The problem escalated on Tuesday With thousands of railway workers continuing Protest against demands for better wages and working conditions – biggest rail strike in 30 years – Resulting in the suspension of large parts of the network. More strikes are scheduled for Thursday and Saturday.

A separate strike by workers on the London Underground has also brought metro services to a standstill.

The National Federation of Rail, Marine and Transportation Workers said rail strikes could go on for months, and teachers, nurses and other workers could walk out as their salaries lag behind high inflation, and are now expected to peak above 11% later this year. general. Unison, a union representing 1.3 million public sector workers, said last week it was “prepared to strike”.

Maggie Simpson, director of the Rail Freight Group, told CNN Business that she expects 30% to 40% less freight to be carried by train over the course of the week, prioritizing critical products, including fuel and supermarket products, for delivery. She said she was “really concerned” about the loss of confidence among companies that were increasingly looking to rail to ship their goods.

A summer of strikes could deal a heavy blow to an economy that is slipping backwards. But activity was already stalled in industries such as aviation, hospitality and social care due to a record number of job vacancies – 1.3 million at the last official count.

Mandira Sarkar, owner of Mandira’s Kitchen, a food delivery and catering company in southwest England, calls the labor shortage a “slow death” for her six-year business.

“It was a complete nightmare… [we’re] “We’re literally on our knees because we can’t find the employees,” she told CNN Business.

Increasing labor gaps across industries are limiting companies’ ability to grow and causing some of them comp to cut off services. Last week, Gatwick Airport, south London, said it would reduce its summer schedule by up to 13% during July and August because it did not find enough workers.

The airline industry has cut jobs during the pandemic as demand for travel wanes, and has struggled to hire and train enough workers to handle the strong rebound in passenger numbers over recent months.
easyJet (ESYJY)The low-cost airline said Monday it will reduce its summer schedule to about 90% of 2019 levels, due in part to the disruption at Gatwick.

But it is not just a relic of the epidemic. Brexit ended the free movement of labor between the UK and Europe, making it difficult for British employers to tap into a huge source of workers.

Sarkar said she desperately needs to hire two people to work full time in her kitchen, and she blames the dual impact of Brexit and the pandemic for keeping workers away.

A staff shortage has forced it to turn away clients, so much so that Sarkar expects its revenue this year to be 40% less than in 2021.

“Everyone in Eastern Europe, everyone we had, those who worked in the hospitality industry have all but disappeared [during the pandemic]leaving this great big hole.”

The missing million

The labor shortage in the UK is uniquely stark among the world’s largest of the wealthy economies.

According to the Organization for Economic Co-operation and Development, the United Kingdom was the only country in the “Group of Seven” in which the proportion of people of working age in the workforce declined between 2020 and 2021.

The Organization for Economic Co-operation and Development also expects that The UK economy will stagnate in 2023 – putting it far behind the G7 economies, all of which are expected to grow.

A recruitment banner in a shop window in Birmingham, UK.

According to the Institute for Learning and Work, a think tank, about a million Britons are “missing” from the workforce. Its CEO, Stephen Evans, He told CNN Business that the country “have weathered the storm relatively well in terms of hiring early in the pandemic thanks to the furlough scheme and other support.”

“But since then we’ve seen this drift out of the labor market,” he added.

Evans said the bulk of that million is explained by workers over 50 who have succumbed with long-term health problems. the job. About a third can be attributed to lower population growth – including lower net migration – and about a fifth due to young people staying longer in full-time education.

While unemployment in the UK has returned to its pre-pandemic level, at 3.8%, this measure only captures the number of people actively seeking work. Evans said government policy tends to focus on lowering that number, but that it should now be redirected to re-engage those who have dropped out of business altogether.

Why similar economies have not experienced the same mass exodus of workers is not yet clear, Tony Wilson, director of the Institute for Employment Studies, told CNN Business.

“[The UK is] One of very few countries in the world that has experienced what appears to be a structural change in participation.”

Wilson speculated that pension freedoms in the UK – workers can tap into retirement savings starting at age 55 – It could be a factor.

The Institute for Fiscal Studies found that workers aged 50 to 69 who retired were the main driver behind the increase in economic inactivity, contributing two-thirds of that increase over the past two years.

Of particular concern, Wilson said, is the growing number of people leaving the workforce due to illness. Whatever the reason, the trend is showing few signs of improvement.

“It’s really sad,” he said.

Britain’s exit from the European Union is stinging

The UK used to have a ready pool of workers on its doorstep, but it is now difficult for European workers to get through the door.

“Increasing labor market migration from Europe has helped calm down [worker shortages] In the past… that doesn’t exist now,” Wilson said.

Ed Tho, Director of Leroy, A Michelin-starred London restaurant is calling Brexit and the pandemic a “disastrous double whammy” for its business.

He told CNN Business that hiring from the neighboring continent was no longer a realistic option.

“It seems that this European gathering is already gone,” he said.

Since January 2021, all EU citizens seeking work must go through the same points-based immigration process as other nationalities. There were around 211,000 fewer EU citizens working in the UK between January and March than in the same period in 2020, while the number of non-EU workers rose by 182,000, according to official statistics.

The elderly care sector, which has long suffered from understaffing, has been particularly hard hit.

Dr. Sanjeev Kanuriya, co-founder and owner of Advinia Health Care, one of the country’s largest healthcare providers, told CNN Business that the pandemic has obscured the “real impact” of Brexit on his industry.

Kanoria, which employs about 3,000 people in 37 homes, said it has at least 10% of jobs vacant at any given moment.

This year, he expects to pay recruitment agencies around 10 million pounds ($12 million). To find permanent and temporary employees – more than three times what they usually spend.

Traditionally, people from Eastern Europe made up about one-fifth of his staff.

“This has really shrunk, that’s down to almost 0% now… we don’t have anyone coming from Europe anymore,” he said.

A government spokesperson told CNN Business that it has “made significant improvements to [its] Employer sponsorship plan, including reducing the time it takes to recruit abroad.”

“With this said, employers should look to the local labor market rather than relying on labor from abroad by investing in the UK through training, wage increases and employment options,” the spokesperson said.

cost of living crisis

Prices are also high Keeping Britons out of jobs in low-wage sectors.

Nadera Ahmed, chief executive of the National Care Association, which represents about 800 home care providers, told CNN Business that the higher cost of fuel is “starting to pay off” for caregivers traveling for work.

“The cost of living crisis is starting to take its toll and people should look into other roles where they might get better salaries,” Ahmed said.

The average hourly wage for a private care worker was £9 ($11) for the 2020-21 financial year, according to Charitable Care Skills.

Despite higher wages, average wages across the economy fell 2.2% year over year between February and April when adjusted for inflation. This is the largest drop in more than a decade, according to the Office for National Statistics.

The Bank of England warned workers not to demand a wage increase to reduce inflation. The central bank has raised interest rates five times since December in an attempt to tame rates.

Zhu said it was difficult to recruit in the “buyer’s market” for job seekers. He tries, unsuccessfully, to find a new chef after one of them left before he even started. At the same time, his input costs rose.

“It’s basically holding back any kind of growth we can hope for,” he said.

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