Buckle up – milkshake droughts are just the start | Torsten Bell


We’re not used to modern capitalism being a mess. For something so incredibly complex, it runs smoothly in normal times. Even those of us who don’t like many of its outcomes – its impact on inequality or the environment, for example – can marvel at how quickly a huge variety of goods and services are made available to us almost instantaneously.

Which in part explains the collective trauma as real supply challenges have emerged, with shortages of certain goods (chickens or anything involving a semi-conductor) and workers (HGV drivers) dominating the headlines.

But no one should be surprised that when we start turning our complex economies on and off – as we and other countries have had to do during this pandemic – things get messy. It turns out advanced 21st-century economies are aren’t as simple as light bulbs.

This will be true everywhere – from missing milkshakes in the UK, to the second-hand car drought in the US and German manufacturers desperate for parts. But Britain’s position is unique, as our Covid supply issues coincide with the impact of Brexit. And that is particularly clear in our labour market.

Talk of an overall shortage of workers, and of firms finding it impossible to hire, seems like nonsense when more than 1.5 million workers are still on furlough. In fact, workers are being hired at a record rate – it’s just that getting millions of people back working after shutting down an economy for so long takes time.

But some sectors – such as road haulage and food manufacturing – are having acute difficulties finding staff. These are small sectors jobs-wise, but once it means a lack of Greggs chicken bakes on the shelves, their impact on society is huge.

Change has been on the cards for these industries for some time. They had got used to relying on migrant labour (pre-Covid, 15% of large goods vehicle drivers and almost half of those employed in food manufacturing were foreign born) but largely have had to manage without those workers under post-Brexit changes to migration rules.

Firms have known for years they would need to adapt, and too many have often put their heads in the sand. But the pandemic has meant that change that might have taken years has happened overnight, with a sharp fall in migrant worker numbers as many returned home.

Things happening fast makes life difficult for firms and their customers. But it has at least brought the choices we face about how we want parts of our economy to function into the open air.

It is perfectly feasible to operate with lower levels of migration. The long-term impact will probably be less severe than supporters or opponents of migration claim. But given the high proportion of fairly unappealing jobs – there is a reason why young graduates aren’t clamouring for a career in meat packing on the minimum wage – it will mean higher prices, driven by a combination of higher wages and investment in machines, or simply by lower levels of output. If we can’t staff abattoirs, we will import pork instead.

There is no point those pining for a McDonald’s milkshake blaming just Covid or just Brexit. They’d more usefully spend their time buckling in for a bumpy ride. And deciding what kind of economy we want in future.

Torsten Bell is chief executive of the Resolution Foundation



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