Posted November 11, 2022, at 3 p.m
Where have the workers gone? In the United Kingdom, many employers are asking the question in light of the recruitment difficulties they have encountered since the lifting of health restrictions. In a labor market that remains very dynamic despite the economic slowdown, job vacancies remain at record highs, at nearly 1.3 million according to data from the Office for National Statistics (ONS), up from nearly 800,000 before the pandemic.
Initially, it was the new post-Brexit immigration rules that were called into question: European workers who returned home during Covid could not return due to the end of free movement. For some time another clue has been put forward: the health condition of the workers has worsened and may partly explain the severe labor shortage.
500,000 Britons left out of the labor market
This thesis is accredited by new data published this Thursday by the ONS. According to the Office for National Statistics, almost 500,000 Britons remain out of the labor market for health reasons.
The upward trend already existed before Covid, but it accelerated with the pandemic, with the number rising from 2 million in the spring of 2019 to 2.5 million in the summer of 2022. “Sickness absence has become a cause of frequent economic inactivity,” the ONS explains in a note , specifying that they now represent 28% of people outside the labor market, compared to 25% at the beginning of the pandemic.
It is difficult to isolate the effect of the long Covid, drowned in a category of “other diseases” in these statistics. On the other hand, mental disorders, which can result from containment measures, have increased by 22%, while musculoskeletal problems (back pain, neck pain, etc.) have increased by 31%. “It is possible that telecommuting since the pandemic has led to an increase in this type of chronic illness,” notes the ONS.
Workers aged 50 to 64 are the first to be concerned, as they represent 55% of this sickness absence. More surprisingly, the phenomenon increased significantly among 24-35-year-olds during the pandemic (+42%).
Risk of inflationary spiral
If these figures provide new elements, the debate is still open. Economists are particularly interested in it because labor shortages can amplify the risk of an inflationary spiral.
During a hearing on the subject in the House of Lords, Huw Pill, the Bank of England’s chief economist, acknowledged that it was a matter of concern for the central bank. “This shortage gives bargaining power to workers who demand wage increases,” he explained.
Depending on the cause of these deficiencies, the reaction of the public authorities will not be the same. In another study, economists from the Institute for Fiscal Studies (IFS) challenged the idea that sickness absence played a prominent role. “The increase in the number of people who are inactive for health reasons does not mean that they have left the labor market for this reason”, explains the IFS. In short, the people in question could be inactive and because of this inactivity had health problems, according to the saying “work is health”.
According to them, it is early retirement that would explain the decline in the employment rate among seniors. “In fact, the two are dependent on each other, analyzes Huw Pill. It is difficult to separate the effects of age and disease. »
Interrelated effects
To shed light on the phenomenon, the “think tank” Demos conducted qualitative interviews with employees who left the labor market prematurely. It actually shows that all these effects are related.
Health problems, combined with a poor corporate culture and lack of managerial flexibility, may have forced these people to stop working. Many suffer from this decision: “Nearly all participants say they would have preferred to continue working if they had been able to,” the report said.