POST-PANDEMIC REBOOT
Every developed country in the world is striving to reboot, accepting Covid is now endemic, and striving to attain levels of economic activity equal to or greater than that pre-pandemic in 2019. From some all-time lows, the rates of recovery are accelerating at rates generally approaching all-time highs as this recovery results not from a financial crash, but largely self-imposed restrictions. And so, pressure on many production and supply systems, and therefore energy and manpower, is a new pandemic of demand. It should be short-lived if people adapt, and practices change.
Sadly too, it is the more deprived and underdeveloped countries who will take longer to recover, and whose progress has not just been stopped but has mainly gone into reverse. They largely depend on the success of the richer economies and to some extent their commitments to deliver not just vaccine but aid, and in some cases a lot of aid. The focus on rapid recovery in the richer world seems unfair but the reality is that, until that world grows back, the poorer world will languish.
However, because demand has rocketed so fast and suddenly as lockdowns switch overnight into hyperactivity, the use of oil and gas has multiplied; global trade awoke with a start resulting in shortages of containers and ports being overwhelmed; and so costs for energy and transport have surged. In Europe, including the UK, and the USA labour shortages in key demand areas, such as drivers, especially for HGVs, and other skillsets slow down production and supply.
The reliance on just in time supply chains for the supply of goods has revealed their Achilles heel: such a system discourages holding more than the bare minimum of stock and so when supply is disrupted there is no fallback; and if a cog in the supply wheel fails the whole wheel stops or slows its turning. Add one or two other unforeseen events, such as in the UK the wind not blowing and so wind turbines not rotating, or a super-cargo ship blocking the critical seaway which is the Suez Canal, and a global shortage of microchips, and the total combination is a global and local tremor, but it is not an earthquake. Adjustments are required, some resilience is necessary and enthusiasm for adapting needs to be summoned by all people. What is not needed is a blame game or spates of media gloomy pessimism obsessing with problems not solutions – yet of these there is no shortage.
ENERGY MAKES THE WORLD’S WHEELS GO ROUND AND SHOULD BE TREASURED
The costs of energy generally have multiplied, especially oil and gas, with consequent price rises for goods as well as for power itself now or eventually flowing through to consumers worldwide. The fundamental dependence of every industry and household on energy has never been more prominent. Arguably a shortage, if not too prolonged, will increase appreciation of this vital commodity, and habits to reduce waste may emerge. That would benefit the world as a whole, with a positive effect on climate change.
Nations which are highly dependent on too few sources, especially if the source is hostile or has vulnerabilities, are paying a price. Is not much of Europe, including Germany, excessively dependent on Russia, not exactly their best friend, and pipelines traversing various others’ territory? Is not the rejection by the German Government of the pursuit of nuclear power coming back to haunt their people? Such a quick strategic long- term decision made by Angela Merkel, following fear stirred by the Japanese nuclear leakage at Fukushima in 2011, is a lesson that knee jerk reaction should be avoided. Arguably such reactions are dictating too many governmental policies around the developed world, politicians fearing the short-term unpopularity of short-term suffering by voters, as elections tend to be only say four years or less around the corner.
Seeing the weakness of over-reliance on sources that a country cannot control; the UK may now revitalise its nuclear energy development programme: but as long ago as 2008 UKGOV sold its nuclear power generators to EDF for what was then a good price of £12billion. The idea was under EDF’s leadership new power stations would be built to replace the ageing fleet. But there was no urgency, and the cost is vast. Even Chinese investment was obtained but the recent realisation of the real inimical, not benign, Chinese global intentions has put that into reverse. So, money was raised for the short-term but strategic energy policy stagnated.
UKGOV has majored on green, especially wind, energy, but recent calmness in weather has demonstrated the weakness in being too dependent on weather reliant sources. Also, even friends such as France threaten to suspend electricity supply to the UK. Perhaps part of the future lies in smaller nuclear reactors, and a lot of them, at a realistic price per unit. Maybe, a good long-term decision will be born out of the current energy shortage and cost in the UK. However, gas having been demonised, the harsh truth is that gas will be a necessity for some time to come in the UK and elsewhere, but it may be expensive. But the biggest risk of epic proportions is that politicians across the world delay the programmes needed to combat climate change because they fear unpopularity of expenditure on the future not the present.
The knock-on effects of energy shortage or excessive cost has been well illustrated in the UK by the effect on the supply of CO2. Who knew that two fertiliser factories owned by a single entity supplied about 60% of CO2 needs to British industry? Or that much processed food production, as well as fizzy drinks, depends on CO2? UKGOV has had to bail out with subsidy the owners to keep the fertiliser factories open and prevent consequential damage across the industrial base. This is but one example of surprising dependencies that have come to light due to the pandemic.
SHORTAGE OF EMPLOYEES WITH THE RIGHT SKILLS
In many developed countries there is a shortage of labour, or at least labour with the right skills at the right price. The dependence of the UK hospitality industry and crop picking on cheap imported labour from Eastern Europe has been understood for some time. The UK market has to restructure and the cost of labour in those industries dependent on exploiting immigrant workers, with low pay and inappropriate living conditions, will rise: those conditions need to improve too. But the shortage is not limited to the UK but is common to Europe and the USA.
The case of the shortage of HGV, and tanker, drivers in the UK provides a great example of industries exploiting employees for as long as possible, refusing to change until there is a crisis. So often it is true that a crisis is needed before reality is addressed and change can be implemented. Reports indicate that the haulage industry has known for a few years that shortages would be inevitable one day. The average age of UK drivers was 55, and young people were hard to attract: working conditions as well as pay rates are poor. Brexit saw a few thousand drivers leave but the problem has been accelerated mainly by the pandemic. Drivers realised there are other jobs where the pay is better and the conditions softer. Tens of thousands of HGV drivers simply stopped never to return. Across Europe, it is said perhaps 400,000 more drivers are needed. France has better working conditions than the UK and may provide a template for improvement to learn from.
For petrol, lack of tanker drivers created slower delivery rates in the UK, and panic buying resulted, and so a problem became a national drama. This problem of tanker drivers is unlikely to be fixed by short term visas for a few thousand Eastern Europeans: why would they come when they can do better in continental Europe? The real answer perhaps mainly resides in a market change in standards by employers, and rapidly. The Government can encourage but should not try to manipulate markets. The public can help by prudent filling of tanks at the more normal rate. Is it not the case that many solutions to issues lie with the public’s behaviour? But there seems a growing knee jerk tendency to look to the State to rescue every problem and the pandemic lockdown state subsidies have unfortunately encouraged that, which is surely not a path to prosperity.
The HGV driver shortage generally is perhaps leading to a shortage on some supermarket shelves of certain products. Dramatized media focus on possible shortages around Christmas does not help and could promote hoarding and panic buying. Apparently, many of the shortages could be in heavily processed food products. These foods are precisely the ones that fuel obesity and the anti-obesity campaigns, so vital for the health of the public, may benefit. Perhaps too the wastage culture that prevails may possibly be reduced by realisation that all good foods are precious.
Worker shortages exist in so many walks of life, and never have there been more vacancies in the UK. Drivers apart, healthcare, butchery, some crop production, hospitality, and technology in the UK are all in need of people. The USA and Europe have similar problems. This is perhaps a result of pandemic measures and changes in habits. As with HGV drivers, these shortages in the UK eventually must be resolved through market changes, assuming the Government sticks to its not always popular policy of weaning the UK off cheap imported labour. Businesses need to grip the problem and work in tandem with Government, with training and incentives at the top of the agenda.
OUT WITH THE OLD
Does not the basis of a number of jobs need to change? The pandemic demonstrated that employers and society need to treat with more respect people in trades which deliver the basics to all people and workplaces. It demonstrated how inter-connected society and people are, meaning also inter-dependent. Swathes of people in what some elitists may regard as lesser professions must be paid so that they can live reasonably. So, wages will surely rise. Is it acceptable that people in work also rely on universal credit? Better if employers pay properly? Shortages will generally mean higher prices, and ultimately the public will fund the cost as there is nobody else to do it. The cost-of-living rise and inflation are perhaps the greatest dangers facing the recoveries in the developed nations. Mitigating these for the poorest in society to a level which decency demands is perhaps the toughest of challenges that the UK and many countries face.
Education in the sense of equipping people with the right skills needed to get employment in properly paid work requires that the partnership between business and government becomes systemic. Perhaps entrepreneurs and technology provide the greatest hope to build a highly skill-based economy. Some less skilled jobs will need to be better paid, with better working conditions, to attract willing workers, assuming the policy of ending imported cheap labour continues. Are not many nations, including the UK, faced with an opportunity, hastened on by the pandemic, to get enthusiastic about change for the better, accepting that some short-term pain will ultimately maximise the gain?
But does not responsibility to deliver the gain rest with each community and all its component parts which need to own the problems and solutions which fit local needs? As Covid time showed, while Government can set a tone and framework, only the populace, each individual and business freely engaging, can deliver results, and it is local, not top-down, efforts which will be most effective. Cannot Christmas time in 2021 be celebrated without adoration of excess and its hallmark of greed, but with appreciation of what there is available? It might be better if learning positive lessons, rather than moaning about failures, predomininated?
