Want growth? Fix Britain’s labour shortages. Here’s how to do that

Retirees aren’t going to flood back into the labour market. How about stopping older workers who are already in work from falling out of it?

As for disabled people, I’ve been writing about the challenges we face in the job market for years (PA Archive)

“Give us growth! We need growth!” We’re all familiar with the drum call that followed Liz Truss’s brief spell in office as prime minister.

One thing we haven’t heard enough of, however, is a realistic way of finding some of that growth. I have an idea: address Britain’s labour shortages. We’ve seen the latest figures, showing that the number of people described as “economically inactive” shot up by 830,000 between 2019 and 2022. We now know that three quarters of them are aged 50 and above.

And we’ve now seen wider calls for retirees to step up and apply for the jobs that are going begging. Britain needs you!

This has come under fire from the Resolution Foundation which, in a report suggesting solutions to the UK’s labour crisis, said: “A policy focus on trying to persuade the recent ‘Covid cohort’ of lost workers back into the labour market is unlikely to work.”

They’re right: if you’ve the financial capacity to spend your time playing with the grandchildren, pottering about in the garden, tinkering with your ancient motorbike, or whatever else takes your fancy, why would you trade that in for Monday morning hell and a surly boss who offloads their frustration on to you when they’ve got a hangover?

The think tank notes that someone who was able to take early retirement during the pandemic summer of 2020 will now have been “economically inactive” for two-and-a-half years. Historically, it says, just 1-in-50 people in this situation return to work every three months.

So what to do?

The increased rate of labour market exits during the pandemic were disproportionately caused by a higher-than-normal rate of retirement among higher-paid professionals, says Resolution. People on lower incomes were much less likely to move from work into retirement.

Just one in 10 of the “economically inactive” 55-59 year-olds who left employment after the start of the pandemic are relying on the support of benefits. So, forget trying to force retirees into joining the line at their local Jobcentre Plus.

The government’s focus should, rather, be on people who are already in work and want to stay there – or who want to join the labour force but face unnecessary hurdles.

In the case of the latter, it means mothers and disabled people. In the former, it’s older workers who find themselves facing a health crisis.

The means of assisting the first of those – mothers – is so painfully obvious it hardly bears repeating: expand the provision of affordable childcare. We can debate how to go about doing that, but the trouble is said debate has been going on for years now; to the extent that it too is blocking up the economic sink. It’s time to apply the plunger. Firming up the right to flexible working wouldn’t hurt while we’re at it.

As for disabled people, I’ve been writing about the challenges we face in the job market for years. But if the DWP can’t bear to read my columns, how about they call in Disability Rights UK; Scope; perhaps Steve Ingham; or the CEO Michael Page? Michael Page is a recruiter and Ingham is a CEO who is disabled. He’d be a man worth talking to. Ableism in the jobs markets is depressingly common. So put the lot them in a room and let them hash out some ideas for combatting it. Then act on those ideas.

As for keeping older workers (or just any workers who suffer a health issue) in work, you could do worse than copy a policy that has helped a lot of mothers by extending to them a right of return. This could keep them in the labour market, rather than having them slip out of it.

Fixing the health service would obviously help, too. I thought about that while being beaten up by my magician of a physio, who has been addressing a back problem. The latter is a major cause of workplace absence.

Keeping people healthy keeps them in work for longer. Spending public money on the NHS with the aim of doing that would yield a handsome return. It would be a far better use of public money than cutting tax for the well-off, who don’t need it. It isn’t rocket science. It’s investment.