The Mystery of the Missing Employee

When the furlough pay scheme finally came to an end on the 30th of September 2021, it was expected that there would be a significant number of redundancies, releasing employees ‘on hold’ in now-defunct jobs back onto the labour market. It had been anticipated that the number could be quite significant as the Commons Library suggested that the number of employees still on furlough at the end of September 2021 was 1.14 million. The reality has been quite different; about half of the employees on furlough were on ‘Flexi-furlough’, and therefore were already back at work part-time. For those that were still fully furloughed at the end of September, one can only assume that their employers have decided to retain them in the hope business will improve and the current spate of reports about labour shortages might have been an incentive to retain staff as replacing them in the future may be difficult. There is, of course, also the possibility that the system was being abused and employers have been claiming furlough pay for staff who were already back at work. HMRC have published ‘transparency data’ of employers who have claimed through the Coronavirus Job Retention Scheme on their website and have encouraged staff and the public to come forward with reports of any employers on the list who they believe have committed fraud. They have allowed themselves a number of years to pursue this further. Which of these possibilities, or a combination of them is correct should become clear in the future. For the moment although, it remains one of the many mysteries currently affecting the labour market.

Another mystery that has been widely reported is the disappearance of what might be termed ‘migrant workers’, largely from Eastern Europe, who appear to have vanished from the labour market. This has been blamed on the impact of Brexit, COVID-19, or labour shortages elsewhere in Europe. All of these will have had an effect, but it is hard to pinpoint which possible cause has had what impact. For example, fewer migrant workers are coming to the UK, something that could be the result of new restrictions on the ‘right to work’ in the UK that had existed when it was a member of the EU but have been replaced post-Brexit. Equally, it could be that due to COVID-19 travel restrictions, fewer people wish to travel to either the UK or to any other country to seek work. If COVID-19 has had a similar impact on labour markets elsewhere in Europe, there may simply be less incentive for people to move abroad to find work. Likewise, if workers already in the UK returned home due to lockdown restrictions, they may decide not to return again if reasonably paid work has become available in their home countries.

In Britain, the statistics reveal a few more contradictory factors. If the numbers in work have remained relatively static, how many migrant employees returned home and who has replaced them? Here, there seems to be a lack of clarity. The ‘right to work’ restrictions implemented post-Brexit led to the establishment of the EU Settlement Scheme, a system of registration for EU nationals already working in the UK. However, this has been met with some criticism. The Institute of Public Policy Research used the term ‘hostile environment’ in a paper published in June 2021, shortly before the scheme was closed. Nevertheless, government figures highlight that by 30th June 2021, just over 6 million applications had been received which was rather more than the 2.31 million EU nationals and 1.34 million non-EU nationals working in the UK according to an ONS survey in February 2020. The discrepancy illustrates the amorphous nature of the matter; it is hard to be precise as to what is happening with such people if even the number of them is unknown. It is also quite possible that some of the people who registered may have subsequently returned home for other reasons, to complicate matters further. Although, it is worth noting that even the ONS did caution that these figures on migration were based upon ‘experimental research’ and were ‘subject to a high level of uncertainty.

If Britain has problems with its labour supply, it is not alone in this. Similar issues have arisen in the US and Europe. In July 2021, Eurofound, the Europe Foundation for the Improvement of Living and Working Conditions reported on “labour shortages…driven by the disruption of intra-EU mobility and migration flows” with inward to migration to Germany falling by 25% in 2020, “leading to labour shortages across multiple sectors”. The training was hit by closures and social distancing, with normal entrants to the workforce simply not arriving nor being available. In short, it sounds similar to issues facing employers in Britain. Yet, if all countries are facing such shortages, it begs the question as to where the missing workforce has actually gone.

It is easy to view this as a statistical matter, with numbers calculated and graphs produced- reports abound with them. What can be often overlooked is the individuals making up these numbers, and perhaps more attention ought to be paid to the workers who have had to deal with the actual impact of COVID-19, perhaps not so much in the direct medical sense, but the practical day-to-day upheaval of their lives. Coping with restrictions has disrupted working patterns, periods of inactivity followed by employers re-opening for business, only for workers to find those who they would be working with had changed entirely. For many, the experience and its many consequences have had a profound impact. What was once accepted as being part of the daily routine, has come under great scrutiny, questions about whether the daily commute is really necessary to have become common. If people begin to question what they have been doing and take the opportunity to move on, this is no fault of their own. If the pandemic is to come under control, with normal trading patterns resuming, the labour market may stabilise, although, it would take a brave pundit to predict that it will be business as usual.


Written by Frances Rigby


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