John Lewis boss: Over-50s quitting the workforce fuels inflation

Dame Sharon White

An exodus of over-50s who left the workforce during the Covid pandemic is fuelling wage inflation, says the boss of John Lewis.

Dame Sharon White said any government must think "really hard" about how to get more older people back into work.

The UK has seen one million people, mostly in their 50s, leave work since the start of the Covid-19 outbreak.

That "inevitably" causes wage inflation, said Dame Sharon.

The number of "economically inactive" people - those without a job and not seeking to work - is higher than before Covid struck, according to the Office for National Statistics. Retirement is the most popular reason given by people aged between 50 and 70 for not working.

Job vacancies are at a record high and employers who want to attract and retain staff are under pressure to lift wages, which in turn fuels inflation.

Inflation, the rate at which prices rise, is currently at a 40-year high while the Bank of England has warned the UK will fall into recession later this year.

The chairwoman of the John Lewis Partnership, owner of the department stores and the Waitrose supermarket chain, told the BBC's Today Programme she had "never seen anything quite like" the country's current economic situation throughout her entire career.

Dame Sharon, who is a former Treasury civil servant, said she was cautious about giving advice to her former colleagues, but said "one area" that had not had "enough attention" was the job market over the past 18 months.

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"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 [or] looking for work - you've inevitably got more inflation and more wage inflation," she said.

"I guess I would encourage...any government to really think much more about how to 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 far fewer people looking for work. It's a big issue."

'Lockdown changed the way I saw life'

Steve Willis retired from his full-time job as a regional account manager for a motor finance broker after he "saw life in a completely different way" when he was furloughed during the height of the pandemic.

"You do not realise the stress that you're under," he said. "What the lockdown and Covid did is make me slow down because you couldn't do anything."

The 58-year-old, who lives in Kent, said his company were "very generous" to him while he was furloughed but said when he returned to work "the whole world for everybody had completely changed".

Having previously met clients face-to-face, out on the road, he was asked to work from home more often and conduct business on the telephone.

"When you get to my age you start questioning things: 'Why am I doing this? I'm not enjoying it anymore,'" he said.

After speaking to his company, Mr Willis agreed to stay on to train a new member of staff before departing. He now works on a zero-hours contract job driving for the NHS where his wife, Grainne, works full-time. And despite the rising cost of living, he has no plans to return to full-time employment.

"We are in a lucky position," Mr Willis said. "I could not have done this without my wife working full-time. She totally enjoys her job. I'm lucky enough that we have not got a mortgage and my daughter is grown-up."

Dame Sharon said she had "never" seen "such a combination of some very difficult factors" impacting the economy during her working career, which has also included a stint as boss of Ofcom.

"I've never seen anything quite like the economic environment we have at the moment," she said.

"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."

Dame Sharon said introducing flexible retirement plans for people and skills courses for older workers to retrain for different jobs could help encourage people back into work

"A million people out of the labour market has got profound, long-term, systemic implications. 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," she said.

'Tough trading'

Dame Sharon admitted trading for John Lewis had been "tough" over the past few months, with the company discussing how it can help customers through loyalty schemes, as well as its staff.

She said John Lewis had doubled its financial assistance fund - a pot of cash where workers can apply for grants and loans if they have difficulty paying bills - from £400,000 to £800,000.

John Lewis has handed out a bonus of 3% this year to its 80,000 staff - equivalent to one-and-a-half weeks' pay - and increased wages by 2%.

However, the current rate at which prices are rising is 9.4% - with the rate is expected to peak at 13% later this year. And the Bank of England is warning the UK will fall into recession.

Asked why John Lewis had not increased its wages in line with the rising cost of living, Dame Sharon said the department store had sought to find a balance: "How do we ensure our partners are able to cope with the cost of living, whilst also thinking about the affordability of pay for the business," she told BBC Radio 4.

"I think the same dilemmas that the partnership faces are the same dilemmas that the whole of the economy faces," she added.