Like so many things around Covid and business, the recovery is not going to script. The simple – and very logical – narrative was that once the economy opened up again, people would start spending.
Pandemic savings would be combined with an end to repressed growth.
The reality is that more and more businesses are experiencing staff shortages as they try to rebuild their operations in sectors that were among the hardest hit.
Up to quite recently, headlines in British news outlets about shortages of goods on supermarket shelves, supply chain difficulties and crucially not enough people to work in low paid jobs, were all simply put down to Brexit.
Even when businesses across the Irish Sea suggested that it wasn’t just a Brexit problem, a bit of schadenfreude at home, meant it was reported as ‘we told you so’.
Brexit is contributing to serious staff shortages in key sectors in the UK, especially the tens of thousands of lorry drivers originally from continental Europe who have left.
In the UK, the Road Haulage Association has said there is a shortage of about 60,000 drivers and there used to be about 60,000 drivers from the EU.
British government officials are telling industry to replace European drivers with British drivers. Industry is saying it can’t train more of them up because of Covid restrictions. Businesses want more visas available.
Other stories from Britain include a shortage of chicken in Nandos restaurants, around 10pc of product lines in Ikea have been affected, some shortages of beer brands in pubs and milkshakes in McDonalds, and even Diet Coke has taken a bit of a hit.
Closer to home, the situation is not as bad, because Brexit is less of a factor, but our problems with labour shortages are very real and are likely to get worse.
I spoke to one hotelier last week who said they had to limit the number of rooms available, because the company that does their linen didn’t have enough drivers.
In the hospitality sector, young teenagers have been plugging more of the gaps as there is a very definite shortage of staff.
Some hotels are saying they will have to limit opening days while others have said they cannot get enough people to clean the rooms.
When hotels in Ireland reopened in the summer of 2020, some staff in what is a tough and often low-paid industry, simply didn’t return their employer’s phone calls to return to work.
They were on the PUP and that was it. But the limited demand for hotel rooms in a delicate reopening enabled many to keep going. Now the rubber has really hit the road when it comes to finding and hiring staff.
The single biggest issue seems to be the number of people who have travelled back to their home countries and not come back – yet.
In Ireland’s case, the problem of staff shortages in certain sectors was very real even before the pandemic. ‘Skills shortage sends Irish employers on global hunt for staff’, was a headline in the Financial Times in January 2019 – 14 months before the virus hit.
But the latest crunch for businesses is around low-skilled workers. Regardless of Britain’s Brexit problems, Ireland has seen its own sizeable fall-off in overseas workers coming to live here.
Estimates from the Central Statistics Office (CSO) for the year to April 2019 (before the pandemic) show 88,600 people migrating to Ireland in that 12-month period.
Some 26,900 of these were Irish, implying a 61,700 influx from outside Ireland.
For the 12 months to April 2021, the number of non-Irish people migrating to Ireland was 35,000, or 26,700 fewer.
On the emigration side back in 2019 non-Irish outward migration was estimated to be 25,000. In the year to 2021 it was 31,200. Here the difference is not dramatic.
But because of the growth in the economy in 2019 and now the fresh immediate spike in demand in 2021, we would have needed those additional tens of thousands who would ordinarily have come in 2020 and 2021, but didn’t.
There is a real danger that we could be on track to repeat some of the mistakes of the booming noughties. It is easy simply to focus on the excessive personal debt and house price explosion of that era.
Yet Ireland priced itself out of so many things during those heady years of hubris. We had very real wage inflation.
We priced our tourism product out of the market too. The hospitality industry was price gouging its customers all over the place.
When the crash came, so many things had to be repriced. Instead of heading towards a debt-fuelled crash we may be experiencing real competitiveness challenges, especially for lower-paid jobs.
The cost of housing is prohibitive. One obvious answer is to pay workers better for these jobs. That would be a better outcome for them and no bad thing as long as companies could continue to create the jobs.
If labour shortages trigger better regulation and conditions for the lower paid, it should be welcomed. But if it also leads to a situation where fewer jobs are created because the cost of doing business simply gets too high, then a balance has to be found.
The Confederation of British Industry says UK labour shortages will last two years. They don’t really say what will happen then. At home, we need to start by acknowledging we have a problem.