Where have all the workers gone? According to a report published at the end of last year by the House of Lords’ Economic Affairs Committee, the loss of an estimated 171,000 EU workers post-Brexit has been just one factor – and not the primary one – in the squeeze on the number of people available for employment in the UK.

While also acknowledging the impact of long-term ill health on the workforce, the committee’s main conclusion was that a sharp increase in early retirement since the pandemic has amplified the effect of what was already an ageing population. Prior to Covid this was “masked by other trends towards higher participation” that are now no longer at play.

This was most definitely forefront in Chancellor Jeremy Hunt’s mind last month when he used his Budget to set out a series of measures to encourage those who have left the labour market to get back into work. Moves targeted specifically at those who have taken early retirement included the scrapping of the lifetime allowance on pensions and the roll-out of what have been dubbed “returnships” – apprenticeships targeted at those aged 50 and older.

The government estimates there are about 3.5 million people of pre-retirement age who are economically inactive, a number that has increased by 320,000 since the pandemic. While underscoring the urgent need to get to the bottom of what is driving this, the Economic Affairs Committee also rather oddly suggested that efforts such as those by the Chancellor may be doomed to failure.

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“Looking ahead, the majority of those over 50 who have left the workforce since the Covid-19 pandemic state that they neither want nor expect to return to work,” the committee wrote in December. “From the limited information available on their economic resources, it appears that most of them are reasonably well-off, suggesting that retirement may be financially viable for them (although the cost-of-living crisis may yet have an impact).

“It would, therefore, be unwise to proceed on the basis that a significant proportion of those who have exited the labour force since 2020 will come back, or be persuaded back, by changes in employers’ practices or by policy measures.”

Against this backdrop it will be interesting to see whether today’s labour market figures from the Office for National Statistics show any further evidence of increasing workforce participation among older adults that was first noted by the ONS in December. The “unretirement” trend saw about 76,000 return to the labour market between August and October of last year as surging costs forced the re-assessment of their financial situation.

This was one of the factors cited for the first rise in more than two years in the number of staff available for hire across the UK. According to the widely-monitored Report on Jobs produced by the Recruitment & Employment Confederation and accountancy group KPMG, March marked the first time since February 2021 that the overall supply of workers had increased, albeit by a small amount.

READ MORE: Labour pool expands for first time in more than two years

The modest improvement gave rise to cautious optimism that chronic labour shortages across virtually all business sectors may be starting to ease, but the scale of the challenge remains immense. With still more than a million unfilled vacancies, the UK labour market is nowhere close to pre-pandemic levels of stability that themselves were arguably not all that healthy.

UK unemployment during the period after the banking crisis of 2008 was kept in check in large part by a surge in those opting to work for themselves, along with a sharp rise in zero-hours contracts that left staff uncertain as to how much they might earn from one week to the next. Living standards didn’t crash to the extent they have with this past year’s energy crisis, but for many the direction of travel was a decade in slow reverse.

As noted by the Economic Affairs Committee, many of the lowest-paid jobs in sectors such as agriculture, hospitality and caring were filled by workers from the European Union who returned to their home countries in the wake of Brexit and the pandemic.

“Counterbalancing their departure has been the arrival of [186,000 additional] non-EU workers granted visas under the new immigration system which prioritises skilled workers,” the committee members said. “This has contributed to a mismatch within the labour force, accentuating labour shortages in these sectors.”

In fact, there are disparities in experience, skills and accessibility throughout the UK labour market that far predate the pandemic, and which are the result of decades of weak economic growth and under-investment. In short, there are far too many poor-quality jobs on offer that are hardly alluring to those not driven by financial necessity.

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

Speaking in March 2020 before the pandemic took hold, CBI Scotland director Tracy Black highlighted statistics indicating that nine out of 10 workers would require some form of reskilling by 2030, with one in six set to go through a “radical” job change.

At that time the CBI was estimating that the UK would need to spend an additional £130 billion in the coming decade to prevent the emergence of new skills gaps – the equivalent of £13bn a year or £4,300 per worker. That hasn’t been forthcoming, and despite Mr Hunt’s assurances, history shows that politicians are rarely driven by long-term policies that extend beyond the next election cycle.

Our willingness to blame so much on Covid has deflected attention from complex and systematic issues that were apparent long before the shock of the global economy grinding to a halt.

Yes, of course the pandemic had an effect on the labour market, as did Brexit. However, the UK’s particular weaknesses are the long-term symptoms of short-sightedness that won’t be fixed by the mass deployment of six-week training courses, nor the removal of pension caps for the fortunate few who have saved up more than £1 million towards their retirement.