In the News

Labour Shortages - Passage from India

Graham Watson

19th April 2022

This is an article where the application of economic theory might help you conceptualise both the problem and the solution.

The hospitality sector in Wales is struggling to recruit staff - with many who worked in the sector having moved to other professions during the pandemic, notably working as delivery drivers.

Thus, there's a labour shortage - but how do you resolve it? The answer has to be higher wages - and there's no real mention of this in the article at all. Employers note that offering higher wages would eat into your profit margin - but have they tried offering higher wages.

I have sympathy with the person running the pub, it's likely to be the case that she has little control over her prices and in this case, she might not have the flexibility to increase her prices to allow for this, but ultimately, this seems like the only way that labour shortages can be overcome.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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