The United Kingdom is undergoing a fascinating social experiment lately. It didn’t really mean to, but it’s been caught in a headlock somewhat of its own making.
They are, for reasons I’ll come to shortly, trying to run a country with a serious shortage of people who live and work at the disadvantaged edge of the economic spectrum, and until very recently, didn’t really pop onto the radar of those in the ruling classes at other end of that spectrum, and it’s not going very well at all.
The Brits have been caught by a pincer movement from Covid, and Brexit.
During last year’s lockdowns around the world economies ground to a halt, many many things were badly curtailed, most things just stopped. Many of Britain’s army of migrant workers lost their jobs, and coupled with concern for their families returned home to ride out the storm.
The full effects of Britain’s extrication from the European Union came into effect on December 31st last year as the grace period where little had changed since Brexit date on 31st January 2020 came to an end.
Lots of things ended that day, including the freedom of movement of EU citizens to the UK and vice versa. Effectively the millions of formerly UK based migrant workers that had returned to their families in the EU, no longer had the automatic right to return.
There were exceptions of course. The much trumpeted ‘points based immigration system’ for entry into the UK, designed to keep the riff-raff out and just bring the captains of industry and youthful go-getters that we really want. There was a minimum salary for any would-be migrant, starting at £25,600, or around €30k per year. Just for reference, around 40% of the UK working population earns less than that, many earn much less, so they effectively closed off just less than half the UK jobs to immigrant labour.
As the lockdowns and restrictions came to an end gradually over the spring and early summer, the economy creaked back into life. Bars, restaurants and hotels opened their doors, trucks hit the roads again. As summer drew to a close the agriculture sector looked around for its seasonal workers to help bring in the harvest, but there was nobody there. The UK is around 100k truck drivers short, 70k in agriculture, around 200k in hospitality. Abattoirs are short, care homes, retail, nursing staff construction. It all adds up to around 1.7 million and counting. There are shortages in shops, and knock on problems around the economy as a whole as the logistics networks have pushed beyond breaking point. Many industries are begging the government to allow temporary exemptions to these often forgotten workers now urgently being reclassified as essential, because they are essential. It’s going to fail though of course. Many of these workers have found themselves new jobs in their home countries or elsewhere in the EU. How welcoming does it sound to offer somebody a temporary visa to come and drive a truck until we decide we don’t need you any more? People quite rightly want some kind of stability to settle down and raise their families.
The same thing, more or less, ended the age of serfdom following the black death in Europe in the mid 14th century. Prior to this the poorest peasants, or serfs, were effectively tied to their landowners, the lord of the manor could treat you exactly how he wanted, usually very badly, and you had little option but to swallow it and do as you were told. The huge death toll meant that if you were one of the lucky survivors, you were in a sellers market. With so few farm workers left, the lords or the manor needed to get into a bidding war if you wanted workers to bring in the harvest, and bonds of servitude were broken.
The same thing is already happening in the UK. Desperate for workers, the salaries for chefs, waiters, bar staff, fruit pickers and so on are rising fast, it’s economics in action. So loud is the clamour for truck drivers for the nation’s supermarkets that salary hikes have led to drivers in other sectors quitting their jobs to join the gold rush. Many local authorities are now running out of drivers for their refuse trucks.
What happens next? Inflation. If your local coffee shop, supermarket, or fruit farm is forced to increase it’s wage bill, it’s the customer that ultimately is going to pick up the tab.
Britain’s economy has taken a double hit, Covid and Brexit, you may argue that one of those was a self-inflicted wound, but we can all learn a little from the lesson in economics being played out in front of us.
In most places in the developed world low pay and high housing costs in many of our cities is putting the squeeze on a large segment of our populations and not very much is being done about it. We rightly value the educated, high earners and high achievers in society. They are often very well rewarded, and an economy needs people like this. It’s very nice to have a city full of architects, lawyers and brain surgeons, but if there is nobody to empty your dustbin, pour you a coffee, drive your toilet roll to the supermarket. or care for your elderly mum then you don’t really have a functioning society at all. They don’t just deserve a fair place in society, our society requires them for its very existence. Perhaps we should learn to appreciate them a little more.
By Phill McCoffers – The Islander Economics Correspondent