The over-50s leading a ‘big quit’ have shrunk the UK labor market and pushed up inflation, the John Lewis boss has said.
An exodus of around a million people from the labor force since the pandemic has led to higher inflation and wage growth, chairwoman Dame Sharon White told BBC Radio 4’s Today programme.
Fewer employees at work means companies face pressure to raise wages, which drives up prices.
As a business, we try to balance how our partners deal with the cost of living with affordability considerations.
It also has major long-term implications for businesses struggling to fill jobs, Dame Sharon added.
Despite inflation and rising wages, the John Lewis Partnership has revealed that it has no plans to raise employee wages in line with current rates.
The company announced in April that it would give its employees, known as “partners” within the group, a 2% pay rise and 3% bonus, as well as a voluntary real living wage commitment set at £9.90 per hour outside London. and £11.05 an hour in the capital.
It will also double its employee support fund from £400,000 to £800,000 with a combination of grants and loans for staff in financial difficulty.
Targeted support measures include offering all employees a free meal between October and January, in line with an expected rise in winter energy costs.
But raising wages to match inflation could hurt the business and the economy, Dame Sharon said.
“As a company, we try to balance how our partners deal with the cost of living with affordability considerations,” she said.
“But we need to be mindful of job security and corporate sustainability, as well as the potential spiral of wage inflation and the impact that would have on business and the broader economy.”
Dame Sharon, who previously headed broadcasting regulator Ofcom, added that business and government must work together to encourage over-50s to return to work.
Flexible retirement options or retraining over-50s for another profession could be solutions, she said.
A wave of employees quitting their jobs to seek better pay and job satisfaction, or to retire, sparked the ‘Great Quit’ after the nationwide shutdowns.
Almost a fifth of UK workers said they planned to leave their job for a new employer in the next 12 months, PwC found in May.
But Bank of England boss Andrew Bailey said this month that workers should refrain from asking their employers for inflation-matching pay rises to prevent inflation from becoming “embedded “.