Brexit Britain: Are older workers actually solution to labour crisis?

It was good to see the matter highlighted by Scottish Chambers president Stephen Leckie, who had simple but valuable suggestions for alleviating labour and skills shortages.

His first suggestion is an obvious one, although that does not mean in any way that it is not worth stating.

It is around flexibility in immigration, which surely makes sense to everyone other than those blinded by ideology.

If anyone doubts that this is an obvious solution, they might want to consider the huge weight of evidence and expert comment that Britain’s skills and labour shortage crisis has been fuelled by the loss of free movement of people between the UK and European Economic Area arising from the Tory hard Brexit.

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Of course, it was plain for years and decades before the Brexit vote that net immigration from the EEA was a major benefit to the UK as a whole and especially to Scotland, which faces particularly great demographic challenges.

The UK Government, however, continues to appear hell-bent on clamping down on immigration, and it seemingly does not matter one whit to Brexiter Tories in the Cabinet that their stance is weighing heavily on the economy and living standards.

Given the UK’s ageing population, it was interesting to hear another of Mr Leckie’s suggestions for solving the labour market shortages: an attempt to attract older people back into the workforce.

Economic inactivity has been very much in focus in the UK of late.

Mr Leckie also flagged a need to help “economically disadvantaged” people into the workforce and this is clearly something on which there should be a major focus. This is important not only from an economic viewpoint but also from a societal perspective.

However, unlike the typical Tory approach, the focus should be on helping people overcome the barriers they face in this regard, rather than using the likes of threats to reduce benefits to coerce people into employment when such individuals might in many cases have very good reasons for being “economically inactive”.

Mr Leckie’s suggestion of attracting older people back into the workforce is certainly worth considering.

However, the degree to which it would be successful is very difficult to gauge.

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The return of a more sensible approach to immigration, attracting young workers from the European countries on our doorstep to fill crucial vacancies, pay taxes and support public spending, would obviously yield greatly positive results in short order.

Mr Leckie, noting that “persistent challenges over access to labour and retaining talent are beginning to take precedence as a leading concern for firms”, put it well this week in his call for a more flexible migration policy.

He said: “At Westminster, we need to see a flexible migration system which aligns with economic need so businesses can hire and attract the international workforce to live and work in the UK. With more vacancies in the UK than people available to fill them, this is an essential route that cannot be avoided if we are serious about economic growth.”

It must be said that it does not seem clear, based on the UK Government’s policies, that the ruling Conservatives are serious about economic growth.

On the older workers suggestion, Mr Leckie declared: “At Holyrood, we have called for measures to tailor elements of the careers service offering to bring older workers back into the workforce.”

This is clearly worth exploring.

However, it may be that many older people are not particularly interested in returning to the workforce. The Office for National Statistics has highlighted a “puzzle” when it comes to people in the UK who are economically inactive. This definition covers people who “are not in employment but do not meet the internationally accepted definition of unemployment because they have not been seeking work within the last four weeks, and/or they are unable to start work in the next two weeks”, the ONS noted.

ONS analysis published last month showed there were 565,000 more people “in economic inactivity” in the UK than prior to the coronavirus pandemic, noting this “has been concentrated amongst those...aged over 50 years and those who have become long-term sick”.

The ONS observed: “People aged 50 years and over are more likely to be inactive, but the coronavirus pandemic has made it more likely that those aged 65 years and over will be inactive.”

It contrasted the situation in the UK, in terms of economic inactivity, with that in most other advanced economies.

The ONS noted: “The UK is one of four of…37 advanced [Organisation for Economic Cooperation and Development] economies where the fall in the employment rate relative to prior to the pandemic is driven by a rise in the rate of economic inactivity rather than an increase in unemployment.”

It added: “The evidence so far implies that some of the behavioural changes of workers in their ability and willingness to work have been more specific to the UK. The challenge of a lower active population would not appear to be a global phenomenon, highlighting that the UK may have specific challenges if these inactive workers do not return to the labour force.”

This point about specific challenges is well made.

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The ONS observed: “One of the features of the coronavirus pandemic has been the ‘participation puzzle’ of the UK labour market. This increase in economic inactivity…in the initial stages of the pandemic has been the fastest on record. However, it has lasted longer than expected. This helps to explain why there is little spare capacity in the labour market today, as there has been a fall in the active population. If it continues to persist, it will also have an impact on the supply potential of the UK economy.”

This is clearly not what the struggling UK economy needs.

The ONS added: “The UK is one of the few advanced economies that is still experiencing this ‘participation puzzle’, which might be indicative of health concerns of workers having more of an impact on labour force participation in the UK.”

The Rishi Sunak administration might want to consider, in light of the ONS’s analysis, the true scale of the foolishness of the clampdown on immigration that has been a key plank of Tory Brexiter policy in recent years.

It seems likely, however, the Tories will choose instead to obsess over how to return the economically inactive to work, even though this might be something of a wild goose chase in terms of older workers. And even though there is a simple solution that is staring them in the face: free movement of people between the UK and EEA.