Sunday, November 27, 2022

Post-Brexit, Sunak faces the dilemma of tackling labor shortages while resisting high levels of immigration

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Post-Brexit, job seekers often don’t match the jobs companies are desperate to fill

How does a government that is ideologically opposed to increasing immigration deal with the economic damage caused by a shortage of migrant workers? This is the dilemma faced by Rishi Sunak in post-Brexit Britain.

Speaking to the CBI, the Prime Minister presented his vision for new innovative industries in the UK that would require a new breed of highly skilled immigration. Union leader Sir Keir Starmer sang from a similar hymn sheet – arguing that some types of so-called “low-skilled” immigration should be reduced, which would force companies to train more domestic workers.

However, the reality is that a large number of vacancies in the UK labor market are not primarily found in the ‘highly skilled’ sectors. According to the latest statistics, the industries with the most bottlenecks are wholesale and retail, mechanical, hospitality, food and care. Meanwhile, the Office for Budget Responsibility (OBR) expects unemployment to rise as economic pressures mount.

According to the Office for National Statistics (ONS), there were 1.2 million job vacancies in the UK in October 2022, excluding agriculture, forestry and fisheries. At the same time, around 1.7 million people are considered economically inactive – out of a job market – who say they want a job.

About a third of these are out of work due to long-term sickness (something that has worsened considerably since the pandemic), but why not the rest – students, people with children, pensioners who can still work and other people who do can not? Find a job – get support in filling the vacancies on the market?

Labor would argue that this is due to government inattention and a lack of focus on support and skills.

“There are more people wanting to go back to work than there are vacancies in the labor market,” a Labor source said. “The problem, for example, is that if you are over 50 and need help getting back to work but you are not applying for benefits, you cannot just go to the job center. The Autumn Statement announced a review of the services but they may underspend the £2bn on Kickstart or Restart [employment schemes] address these people now.”

The Government argues it is focused on creating “higher paying, better quality jobs” – with a quest to help people “return to the labor market in the right way is central to our plans to reduce work inactivity” .

The Department for Works and Pensions said: “Our job centers work closely with employers to fill their vacancies and we encourage more companies to use local talent available through our Jobcentre Plus network.”

The reality is that unemployment and vacancy figures only tell part of the story.

Rob McNeil, deputy director of Oxford University’s Migration Observatory, said free movement has helped certain industries to thrive in Britain, which in some cases had previously been in decline. Post-Brexit, job seekers often don’t match the jobs companies are desperate to fill.

“It begs the question of whether those who are not commercially active are geographically in the right place for the job,” he said. “Another factor is whether they’re actually fit for the job or not – if the job involves physical labor and you’re a light person or with mobility issues, then it won’t work. And there’s the question of whether they’re willing to do the job for the wages available – which is a problem in things like the care sector.”

This leaves the government with the option of offering special visa channels for areas where there is a shortage of workers.

Mr McNeil said: “If the aim was to reduce immigration, should we have a situation where the government creates visa channels for any sector that asks for it? Or should these industries make jobs more attractive by paying more? One could argue that this is not possible in certain areas such as nursing.”

The innovation promised by Mr Sunak could be based on a different type of immigration. Given the government’s promise to create a high-skilled labor market, it’s possible that it wants to allow a new balance to be struck between which industries remain in the UK and which are outsourced to other countries.

But it’s difficult to oversee this transition in the middle of an economic slump, with warnings of rising unemployment and when so much of Britain’s industry is dependent on cheaper migrant workers.

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