‘It’s a seller’s market for workers’: how Covid and Brexit have shaken up UK jobs

For employers struggling to find staff, Britain’s worst labour shortage in decades is seen as putting the economic recovery from lockdown at risk. For workers, it comes as a moment of opportunity.

“For the first time in a generation, it’s a seller’s market for workers,” said Andy Prendergast, a national secretary at the GMB. The union organiser, who represents drivers and couriers in the logistics sector, said there was a rush of activity among members pushing for better pay and conditions.

With Britain estimated to be short of 100,000 lorry drivers, in the midst of an online shopping boom, hauliers have entered a bidding war, offering recruitment bonuses of up to £1,000 and higher salaries.

“Most employers are seeing staff trickle out of the door, and there is a huge risk that the trickle becomes a flood if action isn’t taken,” Prendergast said. “Our message to employers is you need to look at this now, you can’t wait for the next pay round in April. There is a genuine fear you will have no staff left.”

Not all employers are listening. Industrial disputes are springing up across various sectors despite the shortages, including at Yodel, where more than 250 drivers – delivering to Marks & Spencer, Aldi, Very and others – have voted to walk out over pay and conditions.

There have been similar disputes at Booker, part of the Tesco empire that manages deliveries for Budgens and Londis convenience stores, and Hanson cement. Ocado is facing strike action after the Observer revealed some staff working for its Ocado Zoom rapid delivery service were being paid at rates that worked out at less than £5 an hour.

low pay

After decades of decline, trade union membership in the UK increased for the fourth year in a row in 2020, rising by almost 120,000 as employees sought protection from the risks of Covid-19 and redundancies.

Now on the other side of lockdown, with firms sounding the alarm over job shortages, the role of unions is shifting from saving jobs to boosting pay and conditions.

Kate Bell, the head of employment rights at the TUC, said:“The pandemic has certainly changed the role of unions, whether it’s health and safety, access to sick pay, and now decent terms and conditions. Some of the realisation of the furlough scheme is that unions were heavily involved, and really showed why you need collective action.”

A report from the Office for National Statistics (ONS) on Thursday showed a lack of EU applicants was contributing to challenges in staffing the reopening of the economy, especially in transport and storage, as the fallout from Covid collided with Brexit.

Faced with severe shortages, business leaders are calling on the government to expand the visa system to allow employers to hire more staff from overseas, saying this is the only short-term fix for chronic labour shortages.

In the long-run executives acknowledge more investment in training for the domestic workforce is vital; yet are less comfortable talking about pay, warning that heftier wage bills will stoke inflation and hit consumers in the pocket.

“Companies have been very happy to apply capitalism to chief executives. When they can’t employ on a rate, they’ll raise it, but then they refuse to do it for manual staff and cleaners, so we’re having to organise,” Prendergast said.

Businesses across all industries told the ONS a lack of suitable applicants was the main reason for being unable to fill vacancies in late August 2021, with transport and storage firms the most likely to complain about a lack of EU workers.

Among all firms experiencing recruitment challenges, one in four said a reduced number of EU applicants was a factor. This rose to almost one in two (46%) transport and storage businesses, the highest of any sector.

Job vacancies have soared above 1m for the first time, the highest level on record, according to official figures this week. However, average pay still remains below the pre-2008 financial crisis peak, more than 13 years later, after the worst decade for earnings growth since the Napoleonic wars.

Alex Marshall, the president of the Independent Workers’ Union of Great Britain, said: “There’s not a labour shortage, there’s a wage shortage. There are people to do these jobs if the money on offer is right for them to make the sacrifice to do those jobs.”

Official figures show inflation-adjusted pay, including bonuses, was £521 a week in July, £1 below the level in February 2008, amid a reluctance among employers to pay higher wages and the impact of a rising cost of living.

Bell said unionised workers were pushing for higher pay after a decade of weak earnings growth. The TUC estimates if wages had risen at the historic trend rate seen before the financial crisis, workers would be £5,900 better off on average.

“Workers are right to ask for higher pay rises. It is still a long way behind where it should be,” she said.

The government’s “national living wage” has helped the lowest-paid workers. However, Conservative promises made in 2015 to raise the legal floor to £9 an hour by 2020 have not been met, and at £8.91 an hour it remains below the level campaigners say is required to protect workers from falling into poverty.

With terms and conditions steadily whittled down over the years, loyalty to employers was not high at the outset of the UK’s labour shortage crisis, Prendergast said.

“People have been taken advantage of for years, and now they’re saying: ‘This is my time’.”