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Don’t believe the spin: Brexit is responsible for staff shortages

A bar worker pulls a pint for a customer; many pubs are facing a staff shortage - Credit: Dinendra Haria/SOPA Images/LightRocket via Getty

An acute shortage of workers facing many sectors is being spun as a consequence of Covid, not Brexit. Don’t believe it…

The weather is warmer, the days are longer, the sun is (sometimes) shining, and pubs are – for the moment at least – one again open and serving. Just one fly in the ointment: there’s a shortage of people around to pull the pints.

The disappearance of many service staff from the sector has been observed by even the archest of Brexiteers – Wetherspoons boss Tim Martin made headlines last week when he publicly called for easier visas for EU workers who might move to the UK for service jobs.

But generally, there’s something of a desire to frame the problem as some unique result of Covid-19, some temporary blip or unforeseeable problem, certainly not related to any decisions made as the consequence of a 2016 referendum. But after decades of easily filling jobs at wages no-one could truly live on, is the crisis really such a temporary one?

The service worker shortage isn’t just a problem facing the UK – US employers are having difficulty recruiting at their current wages, leading to closures of fast-food outlets, some of them after every worker quit on the same day having tried to keep things going after many didn’t return after shutdowns.

The US has a fairly distinct situation, though, in that its usually incredibly stingy unemployment payments have been quite considerably topped up – by $300 a week – during Covid-19, leaving people who usually have no choice other than to work for even poverty wages with at least some alternative options. Workers have a bit of temporary leverage – Biden has made it clear he doesn’t intend to keep the boosted unemployment insurance forever – to try to get better pay, or to use the time for better jobs.

The UK has also had a Covid boost to benefits, through universal credit, albeit on a much smaller scale that couldn’t, on its own, come close to explaining the staff shortages that cafes, pubs and restaurants have experienced.

Part of the answer is likely to lie in the furlough scheme, which paid people unable to work due to lockdown – or whose employers chose to furlough them – up to 80% of their usual income, while leaving them free to do other work.

For people on lower incomes, changing jobs is often high risk, as even a seemingly better job could leave them with a delay in pay packets that could mean getting behind on bills and so building up financial problems. There is also the problem of time to search for a new or better job – which is difficult when you have an existing job and family or care commitments.

The furlough scheme gave service workers who were so inclined time to search for another job and the income to bridge the gap to a new role. While some people love service sector jobs and wouldn’t wish to switch elsewhere, the data suggests many people took the chance to find work in other sectors and don’t plan to return.

So it would, of course, be ridiculous to say Covid-19 hasn’t been a major factor in the loss of hospitality workers. But broader employment data shows it’s far from the only show in town. It is no secret that in most large cities many if not most people working in the service sector are usually not British, and nor is it a surprise that immigration from the EU has fallen.

If you’re an employer looking for a steady stream of people willing to work hard for relatively low wages, high immigration and open borders – especially with countries with much lower average wages – are hugely in your interests.

That made the EU’s open borders policy a gift to employers of what are officially called unskilled or low-skilled roles, such as care work, service or retail jobs. People would move to the UK in their early 20s, work for a decade or so, and often move back in their mid-to-late 30s to raise families.

The Brexit vote in 2016 might not have immediately changed the legal right to live and work of EU citizens in the UK, but many prospective immigrants to the country took the hint: there are plenty of other rich countries in the UK looking for labour, and with the prospect of extra paperwork and a poorer Britain on the horizon, the country became a less attractive destination.

This showed in the immigration numbers long before coronavirus. EU net migration dropped precipitously from 2016 to 2018, and by the beginning of the pandemic had stabilised at less than 60,000 people per year – less than the number of UK people moving overseas each year. The flow of (often cheap) EU labour had slowed to a trickle before the crisis even hit.

What happened during the crisis itself is less clear. Headlines suggested precipitous drops in the number of EU workers in the UK, with some suggesting hundreds of thousands – if not millions – of people had stopped working or left.

These headlines were based on the landmark UK Labour Force Survey, but they missed a crucial thing: Coronavirus changed how this statistic, based on surveying 40,000 households, was collected.

In normal times, it is collected door-to-door, but due to coronavirus restrictions this changed to telephone collection. This led to a change in who responded to the survey: non-UK households, which are far likelier to lack fluency in English, respond less often to these surveys, making the comparisons unreliable.

What’s more interesting is an experimental set of statistics using payroll data to try to estimate what has happened with EU workers during the pandemic. This finds a much, much smaller exodus than the Labour Force Survey – but still a real one. Overall, payroll data in the last three months of 2020 showed a drop of 2.6% in UK workers compared with 4% for non-UK workers.

Particularly interesting in that data, though, was how the non-UK payrolls broke down. People born outside the EU showed virtually no change in their payroll data, while EU citizens were down 7%. Those trying to say our current situation is all coronavirus and Brexit is a non-factor might struggle to explain that.

Immigration is good for countries and economies alike – but particularly important for ageing societies like ours, where we need a large working population to help support the pensions, health, and social care needs of retirees. Falling immigration shrinks the size of that working population, and is a risk to society as a whole.

But just because migration is overall a good thing for the country doesn’t mean there aren’t winners and losers. People working is pubs, restaurants and cafes were told throughout the last two decades that their wages were fair because that’s what the market had decided, as if it were some fount of wisdom, rather than a summary of individual decisions.

Now that ‘the market’ seems to be dictating that if businesses want more workers they should offer higher wages, the logic is flipping: now the government must step in, business owners claim. The rules should be changed, apprenticeships extended, support offered.

If the logic of the market says that wages can stay low when jobs can be filled, it surely dictates that wages should be higher when workers are in short supply. There is an easy fix to this ‘crisis’: pay workers more, and if that means a few pence more on a pint, we should happily pay that too.

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