Rishi Sunak has dismissed pleas from business to open up immigration to fill gaps in the job market, instead making a major push to tackle Britain’s economic inactivity.
Prime Minister and Chancellor Jeremy Hunt have told business leaders that tackling labor shortages in Britain is a top priority in 2023 and the issue will be at the heart of the budget in March.
Mel Stride, Secretary of State for Works and Pensions, is drafting proposals to encourage those over 50 to return to work, as well as those who are ill. He also prioritizes efforts to keep people in employment in the first place.
The government’s reluctance to take the quicker but politically more painful option of increasing immigration, in tandem with efforts to tackle economic inactivity, is drawing growing criticism.
Philip Hammond, former Tory Chancellor, told LBC’s Andrew Marr on Friday: “We need a workforce in Britain, like it or not, if our economy is to thrive.
“We will have to hire hundreds of thousands of foreign workers to do the work that is not currently being done and that is dampening our GDP growth from the closed restaurants and the pubs not open for seven nights a week, and so on. “
Business leaders have also urged Hunt to expand the government’s shortage jobs list, under which people from overseas can get visas to work in the UK but privately admit increased immigration is off the table post-Brexit.
Make UK, a manufacturing group, said that “with order books filling and the domestic labor market unable to supply the volume and quality of candidates needed, manufacturers have little choice but to turn to recruitment from outside the UK kingdom”.
It added: “At a time when manufacturers are facing immediate labor shortages, their recruitment is being hampered by a onerous immigration system that is not flexible enough or not sufficiently responsive to employers’ needs.”
Since the pandemic began, the number of working-age adults who have retired has increased by more than 500,000, making it harder for businesses to hire workers, weighing on economic growth and perpetuating high inflation.
Reform options being considered by the government include allowing people on long-term sick pay to keep some of those payments when they return to work for the first time.
Tax breaks to encourage return to work for those over 50 have also been discussed, but are considered by some officials to be impractical.
A Stride ally said: “Our overwhelming focus is on helping people who are economically inactive get back into the workforce and stemming the rise of people going into inactivity in the first place.”
Sir Keir Starmer, Labor leader, has it too declined a sharp increase in migrant workers.
Alongside Stride’s project is the publication of a belated white paper on reforming the health and disability benefit system.
Currently, people who return to work and receive disability benefits have to start the assessment process over again if they are found to be unable to work.
“Many people with ill health just don’t want to risk having to go through the whole benefit application and assessment process again if something goes wrong,” said Jon Ashworth, Secretary for Shadow Work and Pensions.
He pledged this week that a Labor government would allow people to return to the benefits they had without having to re-skill.
The change would remove perverse incentives in the current system, where people deemed too ill to work are generally not required to look for work, while those claiming unemployment benefits are subject to strict requirements.
“We currently have a system that encourages people to prove they are too ill to work in order not to be harassed by Jobcentre Plus,” said Tony Wilson, director of the Institute for Employment Studies, a consulting firm.
Vicki Nash, head of policy at Mind, a charity, said reform that allows people to keep some benefits when they return to work is “potentially welcome”, although she has called for a broader change that would allow people would allow them to try paid work without losing their previous benefit entitlements for a year.
https://www.ft.com/content/730bbd85-3e15-4e06-8602-c516d4b3e52a Rishi Sunak is preparing a major push to combat economic inactivity in Britain