If the British economy can’t pay better wages, then it must shrink
Some of Britain’s biggest industries need to shrink and they need to start thinking about how to do it now.
Hospitality is one. Manufacturing could be another. These sectors are among many to say they cannot find the workers they need at the price they have traditionally paid.
With more than 1m advertised jobs unfilled, it has become a major problem holding back the economy.
If the workers are needed, the obvious answer is to ditch the “tradition” and pay them more. And if significant pay rises are out of the question, employers could offer flexible working, more exciting career prospects and better pensions.
Yet these demands are deemed unacceptable by the industries’ bosses, who fear they will increase their overheads, push up prices more than they already have, and drive customers away.
That raises the prospect of record vacancy rates for several years to come as companies soldier on, delaying projects and demanding overtime from existing staff, rather than sacrificing some of their profits to increase pay – and if that isn’t possible, pack up the business.
This year, thousands of firms will be driven to the wall, whether they want to get creative about filling job vacancies or not, because there is one arm of the state alive to the problem, and it is using the bluntest of instruments to make a difference.
Policymakers at the Bank of England want the UK economy to “shrink to fit” and have consistently raised interest rates for more than a year now to achieve that aim. They may do it again when they next meet later this month. A majority of the central bank’s monetary policy committee, which sets UK interest rates, have argued that a labour market that has too few workers chasing too many jobs is a recipe for high inflation,
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