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Getting vacancies wrong

Getting vacancies wrong

Like everything else that was shut down in 2020 and 2021, Britain’s job market was broken.  As businesses attempted to reopen, they were faced with a massive labour shortage.  Lorry drivers, for example, had all but disappeared.  Skilled construction workers were also in short supply.  But the biggest shortages were in traditionally low-paid sectors such as social care, retail, and hospitality.

One consequence of this “vacancy crisis,” was that it fed into a misguided neoliberal analysis of the sharp rises in prices following lockdown.  A proportion of the price increases were “monetary inflation” – the result of people spending the excess currency creation used to fund business support and workers’ furlough payments during lockdown.  But the majority of the price rises were simply the manifestation of a global economy attempting to incorporate and overcome broken supply chains.  Nevertheless, economists, journalists, and politicians began regurgitating the myths of the 1970s, and especially the fabled “wage-price spiral” in which higher wages would force prices to rise even further.

In those sectors of the economy where skilled workers were in short supply, wages did rise.  But the majority of vacancies were – and are – in low-skilled sectors where pay has remained depressed.  According to Office for National Statistics data, 814,000 of the total 932,000 current vacancies are in traditionally low-paid services; 401,000 in retail, hospitality and social care.  Nor is that low-pay merely a choice by business owners.  Rather, it is the result of decades of neoliberal austerity which has forced retail, hospitality, and social care businesses to be among the leanest and most cost-conscious in the economy.  Prior to the pandemic, this had the benefit (although not for the workers) of keeping those services cheap – a core purpose of neoliberalism.  But it also meant that, faced by labour shortages for the first time in decades, these businesses simply couldn’t afford higher pay because they were already cut to the bone.

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Olduvai IV: Courage
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Olduvai II: Exodus
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