Housing is anything from a third to 50% of the average UK earners take home income. Median house price to median income ratios are at historically high levels[0], and rents are now also rising[1]
Either wages need to rise or house prices need to fall.
[0] If you look at somewhere mundane like Essex the median 'affordability ratio', as measured by the Office of National Statistics ( https://tinyurl.com/x5jatcx8 ), was 4.5 in 2000 but is now north of 10. And yes, low interest rates help with monthly affordability but house prices have gone up ~4 fold in the last 20 years while the multiple of your income banks will lend has not, and peoples capacity to save a deposit that is 4x bigger has not.
Old ladies in multi-million dollar homes is largely a myth. Sure, there are some of them. But it's absurd to think this is anywhere near the majority. Short Term rentals make up <2% of the market (almost everywhere beside vacation towns) - and they are not a major cause of problems (outside of vacation towns). Multi-million dollar homes are <1% of the market (basically everywhere). Old ladies living in these homes is a fraction of the total homes.
These are just excuses. These aren't real problems.
The real problem is artificially low interest rates, artificial scarcity caused by NIMBYism, low downpayments (backed by Fannie & Freddie), tax breaks for home owners but not for renters, high income taxes, low property taxes, etc...
The vast majority of homeowners are just everyday regular homeowners, almost twice as many as everyday regular landlords. Little old ladies and short term rental operators make up <3% of the market. You can only blame them for much.
> "Wage rises without solving the housing issue is only going to raise house prices further."
House prices aren't that tightly linked to incomes. House prices are more strongly influenced by interest rates and availability of credit. And, of course, supply/demand fundamentals (ie: population change vs. number of housing units in an area).
What is this mythical 'housing issue' we hear so much about. A housing shortage? I dont see that, if you want a house, you walk into one of the estate agents, they are every second shop on the high street, and you give them money and they give you a house.
'But I want a 12 bedroom house on Park Lane with a 50 foot garden for 100k.' Yes there are issues there.
I'd be tackling housing prices. I think wages (in AU, at least) already render many small businesses unviable.
Historically in Australia, it's seemed like houses have doubled in price every 10 years. More recently, it's seemed like every 5 years. A house I bought 10 years ago would now be 2.5* that as land value alone. A building I bought has apparently doubled in value in five years.
The government has absolutely no desire to do that. Their voter base is predominantly home owners who think of their house as an asset that should only go up in value.
Inflation will make any increase in wages meaningless. It will also further drive investment into housing to escape the free falling cash.
The answer is no lockdowns, no bailouts, and no quantitative money printing to oblivion.
Let the everything bubble pop and start over with sound first principles. We will get there, but not before politicians make it worse and delay the inevitable defaults.
- Boris Johnson (the British Prime Minister) sold his London family home in 2019 for £3.75M after having rented it out for £2000/week (just under 4x the national average income) while living in his Government provided accommodation in his role as Foreign Secretary (2016-2018).[0]
- Property prices have shot up 10% during the pandemic, bolstered in part by the Government cutting stamp duty on sales.
- A few days ago the Government raised National Insurance (which is an income tax) on all workers to pay for social care while protecting property wealth with a contribution cap.
Nobody in power is popping the property asset bubble in the UK any time soon. It's a sacred cow.
I'm in the top 2% of earners by income in the UK and I'm still completely priced out of wrt to buying a modest family home (or flat) a humane, commutable distance of central London. Price/Income ratios are too high even for me because I'm competing with my peers. It's a supply problem, and a problem of foreign investment and bad incentive schemes.
The answer is to control the housing market and stop it being used an investment against inflation. Force people to invest in industry against inflation - not rent-seeking in housing, or cryptocurrency pyramid schemes.
Only allow resident citizens to own the one property they live in, and have the government handle rentals like the old council housing / Folkhemmet homes.
Agreed. 20 years of lower and lower interest rates, meaning higher and higher mortgage amounts have driven up prices into oblivion. Either these prices are inflated away or there is a collapse. There's not much else you can, UK housing market is so far from market reality that it's a joke.
And ironically the more you create policies like lower deposit amounts for younger people, or subsidised mortgage payments, the more you drive up house prices making these policies hurt the next generation of young people more.
Perfect example of government intervention making things worse creating more government intervention etc etc
That sounds a lot like if we just do what we have been doing for the last couple hundred years it will all work out. But we have a couple hundred years of evidence of who it works out for and who it does not.
It's why I'm contemplating moving from the South West to the North East. I work remotely, so it doesn't matter much where I am. Rental costs in the North East are dramatically lower than where I am now (a location that attracts Londoners wanting a place in the country, significantly increasing house prices).
I did exactly that this year - went from £1050/mo for a 2-bedroom flat in the south to £375/mo for a 2-bedroom house with a back yard, in the North East.
You can get anything you need delivered these days, including groceries, and I’m within walking distance of a train station if I need to head to an airport or go anywhere bigger.
This is way too much. We just finished paying off our current house and our payment was around 14% of our net. We are high earners in a low CoL area so the house is really nice, but wasn't very expensive. I can't imagine being "house poor" after this.
Access to cheap loans is partly what's driving the prices up. I think a better solution would be to enact legislation that penalizes the use of residential real estate for capital gains or profit in general, including serial landlords and AirBnBs.
If you permanently reduce immigration, including deporting unauthorised migrants, you can achieve both of those things.
Given the cost of land and building, we should consider Western nations 'full' and only allow immigration 'swaps' from other highly developed countries.
1.) You cannot have a nation of college degree high skilled workers. At least until robots and AI are widespread. Being rich is a lot less fun when you cannot spend it anywhere, because none of those places have a staff.
2.) Since people aren't having kids, and we love to saddle the future with liabilities, someone has to fill that void.
All the hot shot AI inventory management software in the world is useless without grunts actually executing it's guidance on the ground.
You'll be downvoted, but it would be interesting to set a quota based on how attractive other countries are. IE, the UK can only allow in 2X the number of immigrants from country Y if country Y allowed in 1X immigrant in the past year.
No place on Earth is remotely close to being "full", and the economy isn't a zero sum game. Migrants aren't different from newborns (and simply people in general) in the way they don't "take away" some fixed pie of jobs and homes, they're how new jobs become needed and new homes get built (cf. https://en.wikipedia.org/wiki/Lump_of_labour_fallacy).
When a few companies or industries can’t find enough labor, the solution is simple: Raise wages to attract a larger percentage of the labor pool.
When every company and industry is struggling to hire, raising wages is still necessary but it no longer fixes the bigger problem. Those higher wages aren’t producing more labor, they’re just convincing employees with jobs to switch to other jobs. Switching jobs creates a vacancy in the old position. One job opening filled, one job opening created. Net zero.
The pandemic shook a lot of people out of the labor market. Everything from people who were on the verge of retirement anyway to people who were forced to stay home with the kids because schools and daycares were closed. Until labor market participation returns to pre-pandemic levels, the labor shortages will continue.
Employees win in the short term as companies have no choice but to raise wages to fill positions. The flip side is that inflation will certainly follow as rising wages give people more money to spend (demand up) while labor shortages drive supply down. Demand up, supply down means prices go up.
Which ironically could be the impetus that gives people who left the labor market no choice but to return to work: When everything is getting more expensive, people may have no choice but to return to the labor market to earn enough to support their families. It’s going to be interesting to see this settle.
It isn't net zero people can join and leave the labor participation pool, which has been decreasing for awhile now[0]. Higher wages could convince people to join the labor market.
Many companies don't have sufficient margins to raise wages. Hopefully this isn't confused as me endorsing subpar wages, simply that those business can't be sustained or will just endlessly be looking for someone willing to work for cheap because hiring someone for more will actually cost them money. They may be better of turning away some customers vs. hiring someone for a higher wage to support more demand.
Many of the businesses pleading poverty have execs making millions a year - funny how there is never any issue awarding huge bonuses for the top brass, but the cupboard is always bare for employees.
> Many companies don't have sufficient margins to raise wages.
Not too sure how you came to that conclusion. Profit margins for many companies in the UK seem to have actually gone up [1]. You probably assume that companies are subject to perfect competition. That might be true for small businesses but is not really the case for large firms [2]. Some large firms practically are the market and can get away with employing few people for low wages. It's similar to a monopoly that is incentivised to sell few goods at high prices.
One effect of inflation is to reshuffle the economy toward bigger, higher-margin firms. The companies without sufficient margins to raise wages will simply go bankrupt. This reduces competition in their industry, which gives surviving firms more power to raise prices and pay those higher wages.
Higher wages also serves the purpose of allocating scarce labor to the most valuable businesses. Low value businesses will go out of business leaving the workers for the higher value businesses.
Labor shortages don’t necessarily drive supply down — this is going to lead to a boom in automation. Those automated jobs aren’t coming back. We need to phase in a UBI even if it $1 a month for now.
It’s also a unwillingness to train or risk anything but a perfect fit resume. Imho it might take a little investment but employees you train into what you want are usually a win win for the employee and the business on multiple counts.
Firstly these vacancies cover all jobs. Including seasonal Jobs which were traditionally filled by EU workers. Lots of farms struggling to hire this year. There are also lots of part time roles to fill in around furloughed workers.
In a broader sense, jobs need to be in the same places as the people. The UK housing market is such that moving (even to rent) is very slow and expensive. Commuting in both overcrowded and extortionately expensive. If we want poor people to work in our overpriced cities, we have to subsidise comfortable and fast public transport.
Two hours of childcare for one child costs one hour of minimum wage work. Families with more than one child literally can't afford to work. It's also hard to find childcare! More employers could get involved here but it would be more efficient to make 1yo+ childcare free for 30 hours, means assessed.
So yes, higher pay helps, but there are many things that block people from returning to work.
Not just base rate pay but, also, the motivation to do a low-skilled job isn't just to earn enough money to survive but also to improve one's life over the long term.
It used to be the case you could do a labouring job where there would be regular overtime, often paid at a premium. I had one such job many years ago and could double my regular pay by working a few extra hours each day. Then employers realised instead of paying premium overtime rates they could just hire another person at basic rate.
Not sure what the situation is now but back then it became normal for jobs to advertised at 16 hours a week. In effect, these employers were employing 3 or 4 people where they would previously employ one and they could do this because 16 hours turned out to be the optimum amount someone receiving benefits could work and receive a top-up to get a survivable amount of money each month.
I have a neighbor who is quite happy with what the government pays him while he's not working. I'm sure he could be motivated to work by offering larger salaries, but they'd have to be raised by at least 100% to convince him to go from 0 hours/week to 40 hours/week.
I'm not sure there are 3.277 million people without work who want it.
What are these jobs?
Human health and hospitality?
Then they go on and list fruit pickers? And retail stores hiring staff for the Xmas onset?
Are they kidding? These are temporary jobs, probably not previously posted as done underhanded, but now there's no fruit pickers for cheap and they seek more official channels.
And drivers, yes obviously drivers to deliver the aforementioned goods.
Covid, Brexit, good luck finding the fruit pickers.
This is not an economic recovery, this is harvest and Xmas time, nothing fundamental has changed.
As for the housing prices, indeed, as you would say in England, in "the north" , you get double the house for half the price, and even better quality. It's not London though, and there's not too many jobs.
I believe the vacancies are mostly bar staff, carers, farm labour and haulage.
There are a bunch of delusional pub landlords in my city who complain about the lack of staff and claim stuff like "today's youth are entitled and lazy" - but apparently failed to notice local supermarkets literally pay more with fewer hours.
"We advertised locally for 70 fruit-pickers and we had nine applications. On follow-up, only one was still available... in terms of recruiting locally, we failed completely," says Ali Capper, the owner of Stocks Farm in Suckley and chair of British Apples and Pears.
At her orchard, harvest has just started. It must be done quickly and requires many pairs of hands.
Ali had to turn to specialist recruitment firms and has brought in seasonal workers from Poland, Romania, Bulgaria and Russia.
What's a reasonable prediction here? Higher wages and more expensive fruits? A bunch of farms going bust?
I love how all the elite arguments that immigration doesn't reduce wages (which the working class always thought were complete bullshit) were proved to be complete bullshit during the pandemic-related border closures.
Of course, the discussion about what to do about that remains - open borders & keep wages low, or close borders & raise local wages, or close borders & keep wages low & invest in automation - but it's nice to have the discussion honestly, without gaslighting the opposition.
Pretty big red flag was why so many multinational corporations are pro open borders. Corporations rarely take a stance on political issues unless they have a reason to do so.
There’s no opposition to gaslight, the vast majority of the population believes the myth of immigration reducing wages, while there’s no evidence of it being true (you are welcome to provide some). This vast majority is not the opposition, but the force that elected the past 3-4 conservative and euro-skeptic governments that gave us the “hostile environment for foreigners”.
In the UK, EU nationals earn more than the locals, so one inclined to silly socio-economic statements should argue that locals reduce wages.
I'm pretty sure it is well known that globalization equalizes wages globally. That means they meet in the middle. Poor nations see relative wage growth and wealthy nations see relative wage decline. On average everyone is better off but it also means that those living in wealthy countries now feel extreme pressure to compete globally. For most people that simply means skilling up at college and moving to large cities to which investor money is flowing.
This is a really good point, unfortunately I don’t think people will learn their lesson. Instead, we will complain about all the wasted food, and we will spend effort on trying to bring back this invisible servant class instead of investing in automation.
I disagree. The value of the pound plummeted as a result of Brexit. So relative wages might increase in future, but there is no guarantee that it will make workers any wealthier overall. Of course you might argue you only care about relative wealth, but then you have to worry about inflation due to rising cost of imports etc. I think it's more complicated than the simplistic picture you paint above.
For me the things that need to change in the UK are to (i) reduce the cost of access to education and (ii) reduce the cost of housing.
In the short term, sure, the domestic workers get higher wages, but in the long term it just incentivizes fruits to be imported directly from Eastern Europe instead.
On each country it really depends. For the US, low wage immigrant workers don't depress wages that much but in high skill areas immigrant workers can depress wages up to 20% last time I read a study on the matter. So it's really about what kind of work and where. Lots of engineers have felt the squeeze on immigrant labor for years but since engineers don't usually unionize they don't bark as much and thus bare the loss.
Immigration doesn't reduce the wages of those making the argument, who are usually employed in professional/managerial classes that benefit when there are lots of employees at the bottom.
This also illustrates the economically rational response to immigration, though. Be a turncoat. Move up the value chain into management (or other industries that benefit from a larger population of workers), so that you too can benefit.
It is a bit more complicated because if the wages of fruit picker decreases, the farmers may sell their fruits for a lower price. So everyone else's wage actually increases. Not the amount of £ you get at the end of the month but what you can afford with these £ (more fruits).
The meme to mock those critical of immigration (usually conservatives) is "Those dirty immigrants are taking our jerbs!"
It's a miss statement about when the crux of the issue is. It's not jobs being taken, it's wages being held low.
I worked at a warehouse that started pay at $12/hr. This was in 2016. Talking to one of the older guys, he started at $12/hr as well. In 2001. I'm sure you can guess what the worker makeup of that place looked like. There is no need to raise pay if you always have willing workers.
Work camps where exploited eastern europeans live in horrible conditions, their rights are violated, they get underpaid and a substantial portion of their wage goes to the agencies acting as middle men.
In fact I can see this happening across many industries, and if you are one of those people working minimum wage can only be a good thing? The import of cheap labour does push down the wages of the working class - so the middle/upper classes get to buy cheaper fruit...
I believe farmers will have to work with this new "normal", and it'll take a few years for them to figure out how to cope.
It's not like the working class doesn't have to eat. In fact, they will be hit hardest by increasing food prices.
> Indication of some degree of food insecurity was reported by 14.2% of the sample and tended to be higher amongst younger age groups, those on lower incomes, and home renters (as opposed to owners).
A guy driving a truck might enable 10,000 burger sales in an hour. A cashier might enable 100. It's easier to raise the truck driver's wage.
Raising wages and prices can be done, of course. But if you're planning to export those goods to other countries, you've just made your products more expensive. If your goods are fungible, you may not be able to raise the price at all. Higher wages might simply make your business not viable in the context of international trade.
I don't know why they are surprised to receive not many applicants locally, as you can't support yourself in the UK on seasonal work.
The growing prosperity of other countries, may also mean you can't rely on the difference in purchasing power to attract seasonal workers from other countries.
Which leaves either investing in machinery, or perhaps marketing your job as an "experience" to those who aren't relying on the wage, but wouldn't mind some exercise outdoors.
In this case the jobs were always done by foreign seasonal workers. I dunno if Brexit has made them more expensive but I'd imagine they are less easily available.
But the funny thing is in Eastern Europe, where these workers come from and where they presumably are now, there too are record job vacancies and rising wages. So probably something to do with either the pandemic or overheating economy from the cheap money.
> "We advertised locally for 70 fruit-pickers and we had nine applications. On follow-up, only one was still available... in terms of recruiting locally, we failed completely," says Ali Capper, the owner of Stocks Farm in Suckley
> There are currently NO vacancies at Stocks Farm.
> Thank you to everyone who has applied for roles. Due to an amazing amount of applicants, we have been flooded with enquiries. We have closed the April jobs and will reopen for August some time in the summer.
I noticed the article never mentioned anything about pay and conditions for the advertised fruit picking jobs.
My prediction is that the government will make it easier for people to come to Britain for seasonal work. And then they'll make it easier for companies that claim they have "labour shortages", regardless of whether those companies actually tried meaningfully improving pay and conditions first.
Seasonal agricultural labour has been a problem in the UK for literally centuries, since the move away from subsistence farming and the beginning of the industrial revolution. Traditional solutions, as well as migrant labour, include benefits such as subsidised housing and a minimal off-season social safety net. Which I guess are a form of higher wages, but more directly applied.
I suspect that the mix of crops could change in the medium term, to less labour-intensive and more automation-friendly ones. Expect lurid headlines and more expensive strawberry jam.
It will be interesting to see whether the government caves to ag-industry pressure and puts in place special summer visa schemes or similar. On the one hand, the current government is fairly right-wing. On the other; they are quite interventionist, aligned with business interests, and dependent on rural votes. And most of all, media-led. I'd guess they'll respond to headlines about fruit rotting on trees with some madcap scheme.
This reminds me of David Graeber's story on how during one of the pandemics, a plague killed so many people in the UK that those who left got rich by inheriting land and by increasing wages, as there was no one to work.
In the case of UK there was a superstorm of Brexit, IR35 change, and pandemic all in one - adding to the issue for employers. But in a way, I do not see this as an issue but a chance to equalize wealth. Either they will reduce their profit and increase wages, automate or go bust.
Is it good or bad? We will see over a longer period of time...
Second part is not that simple in global economy if you have Chinese cheap labor as direct competitors especially in the food industry where margins for farmers are already too low.
I would recommend Jeremy Clarkson - "Clarkson's Farm" first year of operation on a 300 acres farm made a yearly profit of £144 :)
The labour squeeze is placing upward pressure on wages, which is pumping more money into the economy which is in turn exacerbating the labour squeeze.
Wages have been stagnant in the UK for too long. In the last decade or so certain sectors of the economy (hospitality, agriculture, nursing) have been too dependent on a vulnerable "serf class" of easily exploitable workers.
That workers have got more money to spend is a really good thing for themselves and for business.
Good question. You have to understand that "labour shortage" is code for "I cant find workers for the price that I would like".
Clearly there isn't (and can't be) and actual shortage of workers, there can only be increased competition between employers for available workers.
Its worth noting that in recent history, the times when democracies have been closest to actual labour shortages (post WWI and WWII) have in fact been correlated with economic booms.
The kind of company that can survive in an economy paying X doesn't necessarily survive if they later have to pay 120% of X.
And that doesn't have to be a bad thing either, that kind of company probably wouldn't have existed to begin with if inequality wasn't brutal nowadays.
I am curious when the UK will be less strict with worker visas again for European workers after Brexit. It seems the UK has way more economic issues during this phase of the pandemic than mainland EU. On the mainland there are no empty supermarkets, or farms not being able to harvest because of labour shortages. So it seems to be a Brexit issue. But if they allow more European workers again, what was then the point of Brexit? I would hate to be in the shoes of Boris Johnson.
> It seems the UK has way more economic issues during this phase of the pandemic than mainland EU.
Tangentially related to this, I have heard little mention about how the timing of the pandemic may have been an absolute godsend and a lifesaver for the current British government. The consequences of COVID-19 lockdowns and travel restrictions on the international economy and world trade have made it the perfect scapegoat to blame for the impact of no-deal Brexit.
I don't think they can. Anything related to the EU is toxic within the current government, including relaxing immigration from Europe. Nothing will change unless we get a new government.
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Either wages need to rise or house prices need to fall.
[0] If you look at somewhere mundane like Essex the median 'affordability ratio', as measured by the Office of National Statistics ( https://tinyurl.com/x5jatcx8 ), was 4.5 in 2000 but is now north of 10. And yes, low interest rates help with monthly affordability but house prices have gone up ~4 fold in the last 20 years while the multiple of your income banks will lend has not, and peoples capacity to save a deposit that is 4x bigger has not.
[1] https://www.thisismoney.co.uk/money/buytolet/article-9969349...
There's a bunch of potential solutions, but no-one directly benefits from them in the short term.
Any attempt to fix it will be met with sob stories about old ladies in multi-million dollar homes being "forced out of their homes".
So we'll all just sit and watch as things slowly spin out of control.
These are just excuses. These aren't real problems.
The real problem is artificially low interest rates, artificial scarcity caused by NIMBYism, low downpayments (backed by Fannie & Freddie), tax breaks for home owners but not for renters, high income taxes, low property taxes, etc...
The vast majority of homeowners are just everyday regular homeowners, almost twice as many as everyday regular landlords. Little old ladies and short term rental operators make up <3% of the market. You can only blame them for much.
House prices aren't that tightly linked to incomes. House prices are more strongly influenced by interest rates and availability of credit. And, of course, supply/demand fundamentals (ie: population change vs. number of housing units in an area).
What is this mythical 'housing issue' we hear so much about. A housing shortage? I dont see that, if you want a house, you walk into one of the estate agents, they are every second shop on the high street, and you give them money and they give you a house.
'But I want a 12 bedroom house on Park Lane with a 50 foot garden for 100k.' Yes there are issues there.
Historically in Australia, it's seemed like houses have doubled in price every 10 years. More recently, it's seemed like every 5 years. A house I bought 10 years ago would now be 2.5* that as land value alone. A building I bought has apparently doubled in value in five years.
The government has absolutely no desire to do that. Their voter base is predominantly home owners who think of their house as an asset that should only go up in value.
Probably an unviable business no matter the wage. People cannot be depended on to subsidize someone's business by accepting crappy wages.
The answer is no lockdowns, no bailouts, and no quantitative money printing to oblivion.
Let the everything bubble pop and start over with sound first principles. We will get there, but not before politicians make it worse and delay the inevitable defaults.
- Property prices have shot up 10% during the pandemic, bolstered in part by the Government cutting stamp duty on sales.
- A few days ago the Government raised National Insurance (which is an income tax) on all workers to pay for social care while protecting property wealth with a contribution cap.
Nobody in power is popping the property asset bubble in the UK any time soon. It's a sacred cow.
I'm in the top 2% of earners by income in the UK and I'm still completely priced out of wrt to buying a modest family home (or flat) a humane, commutable distance of central London. Price/Income ratios are too high even for me because I'm competing with my peers. It's a supply problem, and a problem of foreign investment and bad incentive schemes.
[0] https://www.mirror.co.uk/news/politics/boris-johnson-clingin...
Only allow resident citizens to own the one property they live in, and have the government handle rentals like the old council housing / Folkhemmet homes.
And ironically the more you create policies like lower deposit amounts for younger people, or subsidised mortgage payments, the more you drive up house prices making these policies hurt the next generation of young people more.
Perfect example of government intervention making things worse creating more government intervention etc etc
Central Banks can easily knock interest rates down a few points and take away all gains in labor wages (plus more).
Why would Central Bankers (who answers to no one) stop giving themselves (and other asset owners) more and more pie when it's so easy to take it?
What's the incentive to stop? The West is on a 20-year trend to lower interest rates. Japan's on a 30-year trend.
Have you stopped to consider how hard it is to maintain a life a leisure in a low-growth environment without slave labor? /s
Dead Comment
You can get anything you need delivered these days, including groceries, and I’m within walking distance of a train station if I need to head to an airport or go anywhere bigger.
It’s seriously worth considering.
This is way too much. We just finished paying off our current house and our payment was around 14% of our net. We are high earners in a low CoL area so the house is really nice, but wasn't very expensive. I can't imagine being "house poor" after this.
The second thing to do are reforms to make it much much easier to build new housing, as demand far outstrips supply.
Raising wages in not in the best interest of share holders.
Given the cost of land and building, we should consider Western nations 'full' and only allow immigration 'swaps' from other highly developed countries.
1.) You cannot have a nation of college degree high skilled workers. At least until robots and AI are widespread. Being rich is a lot less fun when you cannot spend it anywhere, because none of those places have a staff.
2.) Since people aren't having kids, and we love to saddle the future with liabilities, someone has to fill that void.
All the hot shot AI inventory management software in the world is useless without grunts actually executing it's guidance on the ground.
When every company and industry is struggling to hire, raising wages is still necessary but it no longer fixes the bigger problem. Those higher wages aren’t producing more labor, they’re just convincing employees with jobs to switch to other jobs. Switching jobs creates a vacancy in the old position. One job opening filled, one job opening created. Net zero.
The pandemic shook a lot of people out of the labor market. Everything from people who were on the verge of retirement anyway to people who were forced to stay home with the kids because schools and daycares were closed. Until labor market participation returns to pre-pandemic levels, the labor shortages will continue.
Employees win in the short term as companies have no choice but to raise wages to fill positions. The flip side is that inflation will certainly follow as rising wages give people more money to spend (demand up) while labor shortages drive supply down. Demand up, supply down means prices go up.
Which ironically could be the impetus that gives people who left the labor market no choice but to return to work: When everything is getting more expensive, people may have no choice but to return to the labor market to earn enough to support their families. It’s going to be interesting to see this settle.
https://www.bls.gov/charts/employment-situation/civilian-lab...
Not too sure how you came to that conclusion. Profit margins for many companies in the UK seem to have actually gone up [1]. You probably assume that companies are subject to perfect competition. That might be true for small businesses but is not really the case for large firms [2]. Some large firms practically are the market and can get away with employing few people for low wages. It's similar to a monopoly that is incentivised to sell few goods at high prices.
[1] https://www.reuters.com/article/us-britain-antitrust-idUSKBN...
[2] https://en.wikipedia.org/wiki/Monopsony
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And the low productivity jobs go unfulfilled.
There isn't a shortage of labour. There is a shortage of decent pay and conditions.
Firms are going to have to get over their cheap labour obsession or close and leave the market to those firms that can.
Firstly these vacancies cover all jobs. Including seasonal Jobs which were traditionally filled by EU workers. Lots of farms struggling to hire this year. There are also lots of part time roles to fill in around furloughed workers.
In a broader sense, jobs need to be in the same places as the people. The UK housing market is such that moving (even to rent) is very slow and expensive. Commuting in both overcrowded and extortionately expensive. If we want poor people to work in our overpriced cities, we have to subsidise comfortable and fast public transport.
Two hours of childcare for one child costs one hour of minimum wage work. Families with more than one child literally can't afford to work. It's also hard to find childcare! More employers could get involved here but it would be more efficient to make 1yo+ childcare free for 30 hours, means assessed.
So yes, higher pay helps, but there are many things that block people from returning to work.
It used to be the case you could do a labouring job where there would be regular overtime, often paid at a premium. I had one such job many years ago and could double my regular pay by working a few extra hours each day. Then employers realised instead of paying premium overtime rates they could just hire another person at basic rate.
Not sure what the situation is now but back then it became normal for jobs to advertised at 16 hours a week. In effect, these employers were employing 3 or 4 people where they would previously employ one and they could do this because 16 hours turned out to be the optimum amount someone receiving benefits could work and receive a top-up to get a survivable amount of money each month.
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I'm not sure there are 3.277 million people without work who want it.
https://www.gov.uk/jobseekers-allowance
Then they go on and list fruit pickers? And retail stores hiring staff for the Xmas onset?
Are they kidding? These are temporary jobs, probably not previously posted as done underhanded, but now there's no fruit pickers for cheap and they seek more official channels.
And drivers, yes obviously drivers to deliver the aforementioned goods.
Covid, Brexit, good luck finding the fruit pickers.
This is not an economic recovery, this is harvest and Xmas time, nothing fundamental has changed.
As for the housing prices, indeed, as you would say in England, in "the north" , you get double the house for half the price, and even better quality. It's not London though, and there's not too many jobs.
There are a bunch of delusional pub landlords in my city who complain about the lack of staff and claim stuff like "today's youth are entitled and lazy" - but apparently failed to notice local supermarkets literally pay more with fewer hours.
At her orchard, harvest has just started. It must be done quickly and requires many pairs of hands.
Ali had to turn to specialist recruitment firms and has brought in seasonal workers from Poland, Romania, Bulgaria and Russia.
What's a reasonable prediction here? Higher wages and more expensive fruits? A bunch of farms going bust?
Of course, the discussion about what to do about that remains - open borders & keep wages low, or close borders & raise local wages, or close borders & keep wages low & invest in automation - but it's nice to have the discussion honestly, without gaslighting the opposition.
In the UK, EU nationals earn more than the locals, so one inclined to silly socio-economic statements should argue that locals reduce wages.
For me the things that need to change in the UK are to (i) reduce the cost of access to education and (ii) reduce the cost of housing.
This also illustrates the economically rational response to immigration, though. Be a turncoat. Move up the value chain into management (or other industries that benefit from a larger population of workers), so that you too can benefit.
It's a miss statement about when the crux of the issue is. It's not jobs being taken, it's wages being held low.
I worked at a warehouse that started pay at $12/hr. This was in 2016. Talking to one of the older guys, he started at $12/hr as well. In 2001. I'm sure you can guess what the worker makeup of that place looked like. There is no need to raise pay if you always have willing workers.
Because that's what the UK had before, and it's what the Australian system they're trying to emulate produces too.
https://www.bbc.co.uk/news/uk-england-coventry-warwickshire-...
In fact I can see this happening across many industries, and if you are one of those people working minimum wage can only be a good thing? The import of cheap labour does push down the wages of the working class - so the middle/upper classes get to buy cheaper fruit...
I believe farmers will have to work with this new "normal", and it'll take a few years for them to figure out how to cope.
> Indication of some degree of food insecurity was reported by 14.2% of the sample and tended to be higher amongst younger age groups, those on lower incomes, and home renters (as opposed to owners).
https://academic.oup.com/jpubhealth/advance-article/doi/10.1...
I somewhat doubt that we're talking about upper/middle classes here.
Raising wages and prices can be done, of course. But if you're planning to export those goods to other countries, you've just made your products more expensive. If your goods are fungible, you may not be able to raise the price at all. Higher wages might simply make your business not viable in the context of international trade.
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The growing prosperity of other countries, may also mean you can't rely on the difference in purchasing power to attract seasonal workers from other countries.
Which leaves either investing in machinery, or perhaps marketing your job as an "experience" to those who aren't relying on the wage, but wouldn't mind some exercise outdoors.
But the funny thing is in Eastern Europe, where these workers come from and where they presumably are now, there too are record job vacancies and rising wages. So probably something to do with either the pandemic or overheating economy from the cheap money.
That's not what her web site says. https://stocksfarm.net/vacancies-2/
> There are currently NO vacancies at Stocks Farm.
> Thank you to everyone who has applied for roles. Due to an amazing amount of applicants, we have been flooded with enquiries. We have closed the April jobs and will reopen for August some time in the summer.
My prediction is that the government will make it easier for people to come to Britain for seasonal work. And then they'll make it easier for companies that claim they have "labour shortages", regardless of whether those companies actually tried meaningfully improving pay and conditions first.
I suspect that the mix of crops could change in the medium term, to less labour-intensive and more automation-friendly ones. Expect lurid headlines and more expensive strawberry jam.
It will be interesting to see whether the government caves to ag-industry pressure and puts in place special summer visa schemes or similar. On the one hand, the current government is fairly right-wing. On the other; they are quite interventionist, aligned with business interests, and dependent on rural votes. And most of all, media-led. I'd guess they'll respond to headlines about fruit rotting on trees with some madcap scheme.
It really boggles the mind how for decades we haven't allowed enough new housing to be built.
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In the case of UK there was a superstorm of Brexit, IR35 change, and pandemic all in one - adding to the issue for employers. But in a way, I do not see this as an issue but a chance to equalize wealth. Either they will reduce their profit and increase wages, automate or go bust.
Is it good or bad? We will see over a longer period of time...
I would recommend Jeremy Clarkson - "Clarkson's Farm" first year of operation on a 300 acres farm made a yearly profit of £144 :)
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Wages have been stagnant in the UK for too long. In the last decade or so certain sectors of the economy (hospitality, agriculture, nursing) have been too dependent on a vulnerable "serf class" of easily exploitable workers.
That workers have got more money to spend is a really good thing for themselves and for business.
Reducing the pool of workers (Brexit) doesn't sold the wage problem.
If a production line requires 30 people, and there are only 20... increasing their wages won't help.
It won't encourage additional staff, as company B to Z is doing the same, and people aren't out of work because the wages are too low.
Increasing minimum wage is the better way to do it.
Clearly there isn't (and can't be) and actual shortage of workers, there can only be increased competition between employers for available workers.
Its worth noting that in recent history, the times when democracies have been closest to actual labour shortages (post WWI and WWII) have in fact been correlated with economic booms.
And that doesn't have to be a bad thing either, that kind of company probably wouldn't have existed to begin with if inequality wasn't brutal nowadays.
https://www.theguardian.com/politics/2021/aug/25/business-le...
Tangentially related to this, I have heard little mention about how the timing of the pandemic may have been an absolute godsend and a lifesaver for the current British government. The consequences of COVID-19 lockdowns and travel restrictions on the international economy and world trade have made it the perfect scapegoat to blame for the impact of no-deal Brexit.