Britain has a shortage of workers, but that may be a good problem to have

A few weeks ago there was a fuss about a sourdough pizza chain that was presenting itself as a casualty of Brexit. David Page, who controls Franco Manca, said his staff felt so “bruised” by the vote to leave that they might not return from their summer holidays. “There will be a bigger competition for a lesser pool of staff,” he warned. And worse: “We may have to increase our bonus packages.” Mr Page’s plight was reported as grim proof that the Brexit effect had set in, and was demonstrably bad for business.

But to a great many who voted for Brexit, this was precisely what they had hoped for. There was a general sense that the EU, and the era of mass migration, was working out a little better for venture capitalists who owned pizzerias than it was for those who served pizza. If Brexit evened things up a bit, and forced bosses to pay workers more, would this be so bad? Yes, profits might be squeezed. Yes, Franco Manca might end up charging more than £6.40 for a margherita. But, on balance, would this be such a disaster for the economy?

Mr Page is far from alone. Similar cries of anguish can be heard everywhere, for those with an ear to hear them. The Food and Drink Federation said yesterday that its members will be “unable to feed the nation” without these EU workers who are planning to go home. Lush, a soapmaker based in Poole, is offering to resettle its workers in a factory in Germany. It credits its success to the arrival of EU migrants in Dorset a decade or so ago and doesn’t want to think of a future without them.

Lush soap bombs — Lush doesn't want to think of a future without its EU workers

Even the carmakers say they are facing a crisis: they need 5,000 more skilled staff than they can find (or import). In the Midlands, construction firms complain about a lack of bricklayers, carpenters and plumbers. The Royal College of Nursing talks of a 90 per cent drop in the number of European nurses registering since the referendum. There’s hardly an industry that isn’t raising the same cry: we’re running out of people – and Brexit is to blame.

But this great exodus of EU workers is, as with so much Brexit hysteria, a myth. Yes, a lot of migrants do go home but this was always the case. Young people move to a country, work hard for a few months or years, save their money and then return. It’s a basic pattern of migration. Most of the Britons who went to find work in America in the 19th century sailed back after a while because they didn’t want to up sticks forever. In fact the latest figures show the number of EU nationals in Britain (my wife among them) is at an all-time high and rising all the time. It will continue to rise for the foreseeable future.

So the problem isn’t Brexit, but something more serious. Britain, as a country, is beginning to run out of workers. You can blame David Cameron and Iain Duncan Smith: their welfare-to-work reforms were too much of a success. Unemployment now stands at the lowest level in my lifetime, and is falling still. As one minister tells me: “There only are a few hundred people on the dole in my constituency, and I’ve met them all.” Britain is approaching what economists call full employment: joblessness sinking as low as can be reasonably expected. So if companies are panicking, this is why.

For about a decade, British employers have never had to worry about this because they saw migration as the answer to almost any problem. A FTSE 100 chief executive once confessed to me that when he needed workers for a new warehouse, he advertised with an agency in Poland and flew them over. Other sectors have been using similar methods: EU nationals may make up 30 per cent of workers in food manufacturing, for example, but it was a negligible 1 per cent before Poland joined the EU in 2004. So the workforce was transformed quickly: you can see the same in the changing face of warehouse workers, lorry drivers, chefs and housekeepers. The bottom line is that for a decade and more, a great many industries have expanded using immigration.

And the result? It was a stunning success: the influx of industrious, taxpaying, intelligent immigrants that enriched the economy, country and society. But there were side effects: pressure on public services and houses, for example. And there was another conundrum: if you can import as many trained workers as you need then why bother to develop your own staff or train new recruits?

Ten years ago, a seminal House of Lords report warned that companies would grow lazy on immigration, and might not spend as much time or money training their own staff. The update to that report, recently published, says things developed just as they feared.

Nurses protesting — The NHS found it could pay EU nurses less Credit: Andy Rain/EPA

Nursing was the worst example: the NHS found that they could pay non-European nurses £6,000 less, on average, and funded far fewer training places than were needed. In construction, too, there haven’t been anywhere near enough apprenticeships. Across too much of the economy, employers have not been investing in people as they should have. And now they’re panicking.

Companies had grown a little too quick to complain about a skills shortage, and were rather slow to do anything about it themselves. Now the British workforce has expanded to the highest number in history and even 20,000 immigrants a month is not enough.

So it’s time to think differently. Perhaps invest a bit more in machinery, move workers to higher-skilled jobs, increase productivity, spend more on training and increase pay. This is how a healthy economy is supposed to function. A shortage of workers should mean average salaries on the rise – something that hasn’t really happened in Britain for a decade or more.

Now and again, it’s argued that we need high-skilled immigration but not low-skilled. Now, it’s becoming clear that we need both – but neither will ever be enough because there’s no substitute for a country investing in its own own workforce. So this panic is, in a way, a useful panic. Employers realise now, more than ever, that people are the greatest resource of all. All told, it is not a bad problem to have.