UK labour shortages have been caused by Brexit, which has affected 330,000 people. Due to Brexit, the UK’s immigration policies have changed, which could affect the availability of workers in specific industries.
The COVID-19 pandemic has significantly impacted the global economy, including the UK labour market. Some industries have been hit particularly hard, while others have seen increased demand. The pandemic has also led to changes in immigration policies, which could affect the availability of workers in the UK. In addition, Brexit has also impacted the availability of workers in specific industries, particularly those that relied heavily on EU workers. Changes to immigration policies and restrictions on the movement of workers could lead to labour shortages in these industries. Britain’s labour market has reached a point where it needs more than millions of jobs. This prompts companies to sound the alarm that the country’s manufacturing cycle will be severely damaged in the long term. The government is under pressure from industry to ease immigration restrictions and ease restrictions on workers coming to the UK.
Does the UK have a labour shortage?
There are more than 1.12 million job openings in the United Kingdom. Despite a slight decline since the previous quarter, the number is still considerably higher than before the pandemic. Additionally, unemployment has decreased marginally to 1.25 million people. Even though there are more unemployed than job openings, the numbers are very close. As a result, there are few individuals available.
These conditions make it considerably more challenging to fill specialist or specialized positions. As a result, there is a labour shortage and a skills deficit.
Despite their connection, these two issues provide unique challenges:
Hiring is challenging owing to a labour shortage.
Because of a skills deficit, it is more difficult to find the proper individuals.
According to recent research, 78% of UK organizations have suffered decreased production, profitability, or growth as a consequence of skills shortages.
It is possible that a significant number of UK organizations have experienced reduced output, profitability, or growth due to skills shortages. As mentioned earlier, some sectors of the UK economy have reported needing help finding workers to fill specific roles, which can lead to reduced productivity and growth.
Skills shortages can occur for various reasons, including changes in the labour market, technological disruption, and a lack of investment in training and education. In some cases, skills shortages may be exacerbated by factors such as immigration policy or the impact of the pandemic.
Why are so many people not working in the UK?
Several factors contribute to the number of people, who do not work in the UK, including:
Demographic factors: As the UK’s population ages, some older employees leave the workforce, and fewer new individuals join.
Economic structural changes: The UK economy has seen substantial structural changes in recent years, moving away from traditional manufacturing sectors and toward service sector positions. As a result, some employees need help to obtain a job in their desired industry.
The COVID-19 pandemic has caused significant disruption to the UK labour market, with many people losing their employment or being forced to adjust their working habits due to the epidemic.
Brexit’s Impact: Since the UK’s withdrawal from the European Union, the number of EU individuals coming to the UK for employment has decreased. This has resulted in a decrease in total labour size, especially in specific industries.
Centre for Macroeconomics-CEPR survey results for March 2023
In its March 2023 survey, the Center for Macroeconomics–CEPR asked its UK panel about the constraints on UK potential output in 2023. Two questions were included. The first question asked the panellists to identify the most significant drag on potential GDP in the UK. In the second question, they were asked to suggest a policy that would improve the growth of the UK’s GDP the most.
Question 1: Compared to its pre-2019 trend, which will be the most significant constraint on the UK’s potential output in 2023?
Twenty-two panellists responded to this inquiry. 57% of the panellists believe that Brexit will be the most significant constraint on the UK’s potential output in 2023 (relative to its trend before 2019). Most of the remaining panellists (30%) agree that low labour force participation will constrain the UK’s potential output this year. In contrast, only one panellist believes that energy prices and the Ukraine conflict will be significant economic constraints.
There is a strong belief that the high economic costs of Brexit – less trade, investment, and migration – will significantly constrain UK potential output in 2023 compared to pre-2019 levels.
Question 2: Which policy would impact UK GDP most in the medium term (over the next decade)?
Twenty-four panellists answered the second question. Most panellists (48%) support public investment and R&D subsidies as a solution to the UK’s low GDP in the medium term.
Several panellists say public investments and R&D subsidies are the most prudent means of improving the UK GDP.
Brexit’s Impact on labour supply
After Brexit, the decrease in immigration to the United Kingdom has also affected the labour supply. According to research published in January 2023, it has caused a shortage of approximately 330,000 employees in the United Kingdom.
Data from The Independent shows that Brexit is killing the hospitality industry, with sixfold more venues closing than ever before.
According to the report, approximately 460,000 more EU-born employees would have migrated to the United Kingdom if Brexit had not occurred. There has also been an increase of roughly 130,000 employees outside the EU. However, more is needed to offset the shortage of EU workers fully.
Notably, non-EU employees tend to work in more specialized sectors of the economy, such as healthcare, education, and information and communications technology. Non-EU employees have more than been compensated for EU workers’ decline in these positions.
However, the need for more EU labourers has made it significantly harder for employers to locate candidates for less qualified positions. Since Brexit, the following industries have been most severely affected by shortages:
What statistics show
Evidence shows that the United Kingdom needs more employees to cover specific job openings. The COVID-19 pandemic has devastated the labour market, causing many employees to lose employment or alter their work schedules. In addition, the end of the free movement of workers between the United Kingdom and the European Union as a result of Brexit has contributed to a decrease in the number of available workers to occupy certain positions. Brexit also adversely affected the UK labour market because it resulted in a reduction in net immigration. According to Portes and Springford (2023), Brexit has resulted in a 1% reduction in the UK labour force (i.e. 330,000 people).
Consequently, Britain’s post-pandemic low labour supply probably exacerbated its slow economic recovery. Particularly severe labour shortages exist in the hospitality, food processing, and logistics industries. As a result, several restaurants and hotels have reported needing help locating personnel, leading some to close or reduce operating hours. Significant labour shortages have also been reported in the food processing industry, raising concerns about potential product shortages if the situation does not improve. Several factors, including the pandemic, Brexit, and shifting attitudes toward labour, cause this scarcity.
UK labour market and employment
Employees have reevaluated their priorities and may now pursue more flexible working conditions or higher compensation. In addition, some employees may opt to remain on furlough rather than return to work. Large enterprises in the United Kingdom have urged the government to ease immigration restrictions and make it easier for labourers to enter the country. Finding qualified candidates for specific positions has proven difficult for many businesses, particularly those in the hospitality, food processing, and logistics industries. It is essential to remember that the relationship between immigration and the UK labour market is complex, so any policy changes in this area must be carefully considered. There are concerns regarding the impact of increased immigration on British employees’ wages and employment security, as well as the potential strain on public services and infrastructure. The government has implemented several initiatives to address the labour shortage. These initiatives include expanding training and apprenticeship programs and increasing the number of visas available to specific qualified individuals. The government’s ability to resolve the underlying causes of the labour deficit, such as changing attitudes toward employment and the epidemic’s effects, is limited.