Dame Sharon White, the chair of the John Lewis Partnership, has said that ministers must think “really hard” about getting over-50s back into work after swathes of older people left work during the Covid-19 pandemic, a phenomenon which she says has fuelled current inflationary pressures.
Dame Sharon argued that the exodus of older workers across UK industry has “inevitably” driven up wages, which in turn exacerbates inflation.
Figures from the Office for National Statistics show that there has been an increase in the “economically inactive” number of 50-to-70-year-olds following the Covid outbreak, with retirement quoted as the most common reason for adults of this age group not being in work.
Meanwhile, there are record numbers of job vacancies and low unemployment, and firms have been forced offer higher wages and bonuses to attract new staff and retain talent. These incentives in tandem with global forces have pushed inflation up, while the Bank of England has forecast a fourth quarter recession for the UK economy.
It is an economic prognosis that Dame Sharon said she had “never seen anything quite like” throughout her time in business, given the “combination of very difficult factors” creating a perfect storm.
But somewhat removed from the current political focus on targeted help for rising energy bills, she lamented the lack of attention on the labour market in addressing the problem.
She said: “Regardless of what has happened coming out of Covid, if the labour market is that tight, if we continue to have far fewer people in work, looking for work - you've inevitably got more inflation and more wage inflation.
“I guess I would encourage...any government to really think much more about how to we encourage more people back into work. There's not a business in the UK that's not finding it very difficult to recruit at the moment because there are so many more jobs and so far fewer people looking for work. It's a big issue.
“I think the big worry that everybody has is inflation combined with low growth, low productivity. So I think the big focus for all of us is how do we avoid stagflation? How do we avoid the UK becoming Japan with very low, very persistently low rates of productivity and very low persistent rates of growth? To come out of that you have got to get businesses investing.
“A million people out of the labour market has got profound, long-term, systemic implications and I would like there to be more of a debate, more of an open debate and certainly more of a debate between business and government.”
Highlighting current skills shortages, Dame Sharon suggested that ministers could consider introducing new flexible retirement schemes and create a set of accessible skills courses to help older people upskill for different roles, which will fill vacancies in more skilled sectors.
Speaking also about the trading situation for John Lewis during the ongoing crisis, Dame Sharon admitted that the current environment had proven difficult to navigate.
The business has been helping its workers through a £800,000 financial assistance fund, enabling staff to apply for grants and loans if they are struggling to pay bills, as well as increasing salaries and handing out staff bonuses.
Company salaries have gone up by two per cent and the staff bonus paid out this year amounts to three per cent of the recipient's annual salary.
Despite this, the company's salaries are not keeping pace with the current 9.4 per cent rate of inflation, which the Bank of England projects will exceed 13 per cent before the end of 2022.
Dame Sharon said that the retailer had to “ensure our partners are able to cope with the cost of living, whilst also thinking about the affordability of pay for the business” when explaining why pay had not been adjusted in line with inflation.
She added: “I think the same dilemmas that the partnership faces are the same dilemmas that the whole of the economy faces.”
Photo by Daniel Adesina on Unsplash
