The U.K. sees a ‘massive adjustment’ in the labor market

The U.K. sees a 'massive adjustment' in the labor market

September 8, 2021: The U.K. is undergoing a structural overhaul in its labor market due to Covid-19 and Brexit, and policymakers should “let the labor market do its job,” according to Minouche Shafik, the London School of Economics director.

British businesses are blighted by a combination of worker shortages and supply chain disruptions that have sent wages and prices skywards across a range of sectors, which include haulage and logistics, care, and agriculture.

The recent increase in manufacturing costs and energy prices is expected to trigger a spike in inflation in the coming months. The U.K. consumer price index is increasing 2.1% in the year to July, above the Bank of England’s target, reaching 2.5% in June, its highest reading since August 2018.

The Bank maintains that inflationary pressures are transitory but has raised its forecasts and expects inflation to peak over 3% by the year-end before normalizing.

The former deputy governor of the Bank of England, Shafik, told CNBC at the European House Ambrosetti Forum for the weekend that she agrees with the prognosis of the central Bank.

“I find it so interesting that at the moment people are talking at the same time about skill shortages and how automation will make jobs disappear, so it is a very ironic moment, and I think what reflects is that we are in the middle of a huge adjustment in our labor market as a consequence of Covid and Brexit,” she added.

British supermarkets promise truck drivers substantial wage increases to address a critical shortage, while evidence is mounting of labor cost jumps across multiple key sectors of the economy.

The situation will be having Bank of England policymakers on high alert since a sustained increase in the growth of their salaries could lead to a more prolonged period of high inflation than projected currently.

As part of the “structural transformation,” Shafik suggested that some sectors will increase while others will have to raise wages to recruit, which argues that “we have to let the labor market do its job.”

“When I was at the Bank of England, we constantly waited to see some movement in the pays so that we could see some movement in inflation so that we could produce the interest rates, and it was like ‘Waiting for Godot,'” she told CNBC.

“Well, we finally see some wage increases, and after a decade of stagnant wages, that is probably no bad thing.”

She added that the current climate might also incentivize companies to invest in productivity enhancements, leading to a pickup in productivity.

“We should let it run till these structural changes play out, and then we see the amount of these will result in a permanent change in the price level, and if so, then we need to react monetarily.”

About Us

We provide the insights on leaders who are responsible for taking their organization to new heights, all the while bringing together a group of talented individuals.

Recent Posts

Urban League of Greater Chattanooga | A Driver of Change | Candy C. Johnson

Before taking on the helm of the Urban League of Greater Chattanooga as its first female President and CEO, Candy Johnson served in a variety of leadership roles. Ranging from being the youngest-ever elected City Council member in her hometown at the age of 25 years old, to running a successful non-profit education foundation, serving as policy director at a Chamber of Commerce, to senior advisor to the Mayor of Chattanooga, and as an independent consultant for non-profits and business organizations. She has remained consistent and masterful at integrating past knowledge and experiences to solve present problems. She is what some in academia would consider a “boundary spanner,” civic ‘entrepreneurs of power’ who understand coupling, interdependencies and strategically utilizing networking skills and judgments with an emphasis on the importance of cultivating interpersonal relationships, communication, political skills, and an appreciation of the interdependencies around the structure of problems and their potential solutions. Other research around the notion of boundary spanners would suggest someone with Candy’s attributes as ‘catalysts who bring together problems and solutions that otherwise would bubble chaotically in the conventional currents of modern policy streams’ (deLeon 1996, p. 508).

Tridon Communications | The Transformative Solution Provider | Ben Thompson

Tridon Communications, founded in 1981 and currently led by Ben Thompson, CEO, Chad Tomachefski, CGO, and Greg Tolson, COO, is western Canada’s leading Telecommunications System Integrator (TSI). Tridon aims to address all aspects of telecommunication system requirements, including PTT land mobile radio, fiber optics, structured cable, access control, PTP wireless and microwave, tower construction and maintenance, cyber security, and more. Tridon can take any telecom project from inception to completion, including design and engineering, project management, construction, installation and maintenance, repair, and maintenance, successfully providing organizations with end-to-end solutions as a single point of contact for wired or wireless communications.

Igniting Success® | Enhancing Human Potential | Angela Cusack

Angela Cusack, Founder & CEO of Igniting Success®, is understated and patient. She moves quickly as she partners with executive leaders in shaping cultures that produce deeper connections, higher engagement, and overall well-being and prosperity for all involved. Angela is an impact player. Someone whom many refer to as their “organization’s secret weapon.”

Commonwealth Charter Academy | Building A Great Future Generation | Thomas D. Longenecker

Innovation is a crucial aspect of leadership. Innovative leaders can think creatively, identify opportunities, and develop new ideas to help their organizations grow and stay relevant in a constantly changing world. They can inspire their teams to think outside the box and create new solutions to problems. Thomas D. Longenecker is an innovative leader with the unique ability to strategize at the micro and macro levels. His leadership style, complemented by his extensive finance and operations experience, fosters collaboration among the senior leadership team, which ultimately is spread throughout all verticals of the organization.

Tristar Coatings | Transforming The Painting Industry With Innovation | Svetlana Melkova

There are many challenges facing the painting and coating industry today, and the pandemic just added fuel to the fire. These include raw material shortages and the globalization of the painting and coating market. Other challenges include increasing regulations due to environmental concerns and increasing manufacturing costs and raw materials. Ontario-based Tristar Coatings has been able to leverage its extensive knowledge base and highly skilled chemists to provide the solutions today’s organizations need in the time they require it most. In overarching terms, customer performance requirements can mean increasing product output whilst streamlining the process in which that product is manufactured. This can come in the form of preparing the substrate before the painting process (whether that be with physical or chemical cleaning) or actual product modifications to prevent or promote certain properties in the coating (such as adhesion, corrosion protection, film build, UV resistance, etc.), but Tristar has it all.

The Lake Companies | Making Manufacturing Easier…Forever! | Greg Lake

The Lake Companies knows that to achieve best practices, specific daily business processes must happen and be done as simply as possible, even without human effort. “That’s how we develop our ERP software products. We strive to completely transform internal business processes and revolutionize the user experience with our software,” says Greg Lake, President of The Lake Companies. “Building the support for best practices in our software allows our customers to achieve far more than they anticipated, while paving the way for growth into advanced IoT and Industry 4.0 technologies. Our Simple, Elegant, and Powerful solutions are built specifically for and seamlessly integrate with Infor’s SyteLine®(CloudSuite®) ERP.”