Ilfracombe - Credit: Graham Hobbs

Labour Shortages - How is this affecting Northern Devon? - Tim Jones

Tim Jones

Notwithstanding the general fears about the state of the economy and the strong indications that we might be on the edge of a recession, it is both concerning and puzzling as to why the country is currently experiencing the tightest labour market in nearly five decades.

The puzzling aspect of this is that many workers have simply left the jobs market. The latest figures from the Office for National Statistics suggest that overall economic inactivity rose by 522,000 people from October to December 2021, compared with those months in 2019 immediately before the pandemic.

A more detailed look at these numbers shows an alarming trend which is a worry for the Northern Devon economy. Of the total number who have withdrawn from work, approximately 493,000 were aged 50 or over. Some efforts have been made to understand why this number is so large.

There are certainly two major factors that are contributing to the problem, the first being long term illness and the second an increasing need for those within this age group to look after family members. Nearly half of those giving up work gave these reasons for their decision to stay at home.

It is also clear that we have dramatically underestimated the impact of Covid (and long Covid), not only is this disease still prevalent throughout all age groups but it is emerging that in many cases, far from this being a bad cold there can be long term health implications.

Many with whom we have spoken, who are now diagnosed with long covid report difficulties with general fatigue and an inability to function mentally as well as they could prior to contracting the disease. It is not unusual to hear that there can be a 30% reduction in ability both physically and mentally. Clearly, this has implications not only for the individuals themselves but in many cases is requiring some sort of caring facility to deal with the recovery therapies.

What is also concerning here is that, prior to Covid there had been a decade of growth for those seeking work. This has been particularly evident in Northern Devon with a higher proportion of workers aged 50 or over having been actively seeking employment or remaining within the workforce for longer than had been previously experienced.

It is not unusual for many of these to be at or over official retirement age. Many employers have benefitted hugely from this, particularly because of the considerable skills and experience that has been accumulated over a lifetime of working.

During the pandemic it is likely that over 3 million over 50 year olds were furloughed. This interruption has clearly been a reason why a large number have had a chance to rethink their lives and also to consider whether retirement might not be such a bad option.

Some further research on this has also been conducted and it seems that a high percentage of those workers aged between 50 and 70 who have dropped out have come from skilled work were there were advanced levels of education up to and including degrees. The vast majority were male and many were from professional backgrounds. Clearly, within this grouping it is likely that many had accumulated sufficient savings and are probably well supported by generous final-salary pensions.

It is also interesting to note that the unintended consequences of greater pension freedoms being available following the initiative by George Osborne in 2015 when legislative changes were introduced for those 55 or over being able to access their pension pots whilst no longer having to buy annuity with the proceeds.

This situation is both a challenge and an opportunity for Northern Devon. The challenges include the fact that there are now very serious labour shortages. This has an impact on wage inflation. It has also removed many who were highly productive, thereby leaving both the region and the country with reduced levels of gross domestic product.

Northern Devon has its fair share of over 50 year old in this category. The opportunity is therefore considerable for us to shape economic, enterprise and employment prospects to bring them back to the workplace. This is not that difficult to achieve if flexibility is introduced. For example, hybrid working – say 2/ 3 days in the office and 2/ 3 days working from home – could be a very seductive package.

This is also a great chance for us to demonstrate the benefits of being self-employed. There is ample business support out there for start-up entrepreneurs. Most importantly, however, the state of digital technology means that virtually everyone can work from a remote location and access local, national or international markets.

For all those employers who are struggling to fill skills gaps, this is a real chance for them to revisit their standard employment packages and shape the job to match the skills available. Our Local Authorities are excellent at assisting with projects like this. We also have the fantastic contribution of our education providers.

Petroc College, for example, have some superb courses which are specifically designed to encourage people back into the workplace or to re-train existing workers who might be at risk of retiring. The toolkit is there to use, this is a great chance for Northern Devon to buck the trend and start to reduce both the needs of employers and to address the skills gaps.

Tim Jones, chairman of North Devon Biosphere Foundation
Tim Jones, chairman of North Devon Biosphere Foundation