Both the CBI and the CEO of Next have called for a relaxation of immigration rules so as to provide more workers. There are desperate shortages of staff in some sectors of the economy such as retail and hospitality, particularly in low-paid unskilled jobs. With a booming economy it has proved very difficult to recruit staff at wage levels that companies want to pay.
The problem has been compounded by a rise in “inactivity” levels, i.e. people who could be employed but are not. Some of them are suffering from long-term sickness but others have simply dropped out of the workforce because they can survive on benefits. The Covid epidemic has encouraged these trends but in essence there are underlying factors such as demographic changes that are a major cause. As the population ages people are less keen to work and are more likely to suffer from medical complaints that the NHS cannot fix quickly due to mismanagement of that service of late.
Do we need to allow more immigration to help businesses? I suggest not. A tight employment market encourages companies to invest in improving productivity when if they can hire labour easily they do not. Poor productivity is one of the major problems in the UK economy and has been for years.
Even Labour leader Keir Starmer is opposed to unrestricted immigration and has said “Let me tell you: the days when low pay and cheap labour are part of the British way on growth are over”.
The UK needs to look at fixing some of these problems via Government policies on social security benefits including pensions and helping those suffering from illness by improving the NHS while companies need to invest more in productivity improvements. That means more equipment and better training.
Two more sets of results from companies I hold in my portfolio came out this morning. Recession? What recession?
Telecom Plus (TEP) reported revenue up by 51.5% and adjusted profit up by 22.5% with dividends up to match in its interim results. Reading this company’s results helps you understand the impact of the energy crisis on household bills and the impact of government interventions to cap prices.
Not only has the company increased the number of customers signed up to its services because they now have a very competitively priced offering for energy supply, it has also meant that more people have been signing up to sell their services as their household budgets have come under pressure due to the rising cost of living.
The rising cost of energy has also meant customers have reduced their energy consumption by 10% over the summer with a larger reduction expected over the winter months. Customer churn remains at record low levels and bad debt provision seems not to be a problem although that might rise. Forecasts for full year profits and dividends have been increased.
As both a customer of Telecom Plus as well as a long-term shareholder, but not a reseller, I am happy with the progress made.
Intercede (IGP), a company specialising in digital identities, reported revenue up 24% in their interim results and net profits up 124%. Again there is a positive outlook statement and it looks like the strategy to grow by acquisition is paying off. The share price may not have been buoyant of late as small cap technology stocks have fallen out of favour but the company seems to be doing the right things. That’s solely my opinion as a long-term holder of the shares of course.
Both companies demonstrate that there are still profits to be made, even in the tricky energy sector where the government has been interfering.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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One thought on “More Cheap Labour Required? And Results from Intercede and Telecom Plus”
Postscript: Whinging about the lack of immigration is ridiculous when data from the Office for National Statistics (ONS) showed that net migration rose from 173,000 in the year to June 2021, to 504,000 in the year to June 2022, an increase of 331,000! The problem is clearly not of potential employees but simply that they are either unwilling to take the jobs or are unqualified to do so.