Supply chains updates
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For the first time since early in the pandemic, Britain’s supermarkets are struggling to keep their shelves replenished. Nando’s, the fast-food chain, had to close 45 restaurants because of a chicken shortage; McDonald’s is low on milkshakes. Supermarket bosses have warned of possible shortages at Christmas. Supply chain bottlenecks are due in part to a labour squeeze — especially lorry drivers. Some reasons are short-term. But longer-term shifts are at play that could have profound effects — tilting the balance of negotiating power from capital towards labour.
Worker shortages are far from just a UK problem. Squeezes are also being reported in France, Germany, Italy, the Netherlands and Scandinavia, and in similar sectors: hospitality, distribution, construction, health and social care. Britain did suffer an earlier and bigger surge of infections with the Delta variant than some EU neighbours. The “pingdemic” of workers forced to self-isolate after contact with an infected person coincided with school holidays, leading to unusually high absences. Yet many factors fuelling the employment squeeze are the same as in the EU and the US.
Multiple sectors are reopening and rehiring all at once after long lockdowns. Rapid restocking is piling extra pressure on distribution. Some expanding sectors such as online retail and the grocery trade sucked workers out of the hospitality sector during lockdown. The pandemic has led some workers to rethink their priorities and drop out of arduous, low-paid jobs.
The flow of migrant workers from central and eastern Europe to the wealthier west was already starting to reverse pre-Covid, as growing economies and salaries lured some home. But while exact data is scarce, the pandemic is estimated to have prompted hundreds of thousands more to return to Poland, Lithuania and elsewhere. The UK Office for National Statistics estimated 364,000 fewer EU nationals were working in the UK in the third quarter of 2020 than a year earlier; some estimates are much higher.
For the UK, however, Brexit exacerbates the impact of the outflow. EU nationals who applied for “settled status” can return if they wish. But the end of free movement now the post-Brexit transition period is over means others cannot return without work visas. Remainers will see this as a negative result of the EU departure. Many Brexit supporters may be more relaxed; a belief that too many jobs had gone to overseas workers, driving down pay, swelled the Leave vote in 2016.
To ease shortages, Boris Johnson’s government is being pressed by industry chiefs to issue more visas to EU drivers and farm workers. But its political commitment to lower immigration limits its room for manoeuvre — and with plenty of job openings across the EU, it is unclear how many Bulgarians or Romanians would be ready to navigate the extra bureaucracy of coming to the UK. The government will need to have answers when shortages occur in other sectors — as is likely, for example, in social care during the winter.
Longer term, without sizeable special visa schemes or a broad labour mobility agreement with the EU, filling the vacancies will mean having to offer better pay and conditions to UK workers. Where technology cannot substitute, training will have to be expanded to provide the skills needed, in everything from plumbing to haulage. Over time, this could boost the government’s “levelling up” agenda. But it is also likely to mean higher shopping bills for consumers, and a need to channel more resources into education. Before too long, these are trade-offs the government will need to explain to voters.