UK economy facing serious challenges – House of Lords
An exodus of more than half a million people from the British workforce since the coronavirus pandemic is posing serious challenges for the nation’s economy, a House of Lords report has warned.
According to a report entitled “Where have all the workers gone?”, issued by the Economic Affairs Committee on Tuesday, earlier retirement among 50- to 64-year-olds is the biggest of four factors that have made it harder to fill jobs. The report highlighted that increasing sickness, changes in the structure of migration, and an aging UK population have also contributed to the labor crisis.
The sharp rise in economic inactivity – when working-age adults are neither in employment nor looking for a job – exacerbates the current inflationary pressure and damages growth in the near term. This also reduces the revenues available to finance public services while demand for those services will grow, the committee said.
“Those who are already economically inactive are becoming sicker, meaning they’re less likely to return to work. So, while other factors were previously masking the impact of an aging population on the size of the workforce, they are now reinforcing it,” said Lord Bridges of Headley, Chair of the House of Lords Economic Affairs Committee.
The report comes amid rising concerns that the UK might be the only country in the developed world where employment is still expected to be below its pre-pandemic level at the start of 2023.
Official data shows inflation, which slowed from a peak of more than 11% in October to 10.7% last month, is still among the highest rates since the early 1980s. Average wage growth in the country reportedly has strengthened to about 6% in recent months, but remains significantly below inflation.
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