Businesses, including hospitality firms, will need to automate wherever they can to cope with an increasingly acute shortage of labour.
That was the warning from behavioural economist Roger Martin-Fagg, who was speaking last night at an event held at Saatchi & Saatchi’s offices in London by caterer Bartlett Mitchell entitled: “Making Sense of a Slightly Mad World”.
Martin-Fagg said that an ageing population and lower numbers of younger people, combined with potential limitations of the number of workers allowed into the country from abroad post-Brexit meant that it would become increasingly difficult to find labour.
“Over the next year, the biggest problem you are going to face is a shortage of people. There is a solid labour constraint in this country and it can only get worse. This was removed to some extent by good quality people coming in from other countries and the EU. If we limit that then we are going to have to do something else – automation,” he said.
He told the audience: “The core strategy for you running your business will be to automate where you can but not to the extent that you lose the magic of what you do.”
His comments came as part of a wide-ranging talk that examined the economic prospects for the UK. Making accurate economic forecasts is difficult for mainstream economists, he asserted, because for 80% of the time people work on instinct, rather than following mainstream economic thinking.
“Social media is doing us a huge injustice,” he said. “The like button creates confirmation bias. We have much more information than we have ever had but less knowledge.”
Economic confidence in the UK is driven primarily by the value of people’s houses, followed by the weather, he claimed. Currently, confidence is reasonably high and the money supply is growing strongly.
However, there could be more difficult times on the horizon, depending on what happens with Brexit negotiations.
“Every 10% fall in Sterling is another 1% on inflation,” he said. “If negotiations don’t go well, Sterling could fall further. We could even see parity with the US dollar.”
Martin-Fagg said that the problem the UK economy had was with its balance of payments. The UK runs a 6% trade deficit and in the event that negotiations do not go well, he expected interest rates to rise to 3% and a recession to arrive in 2019.
If the UK does manage to strike a free trade deal with the EU then “everything will be ok”. “This year will be much better than people expect, but it could go wrong in the middle to the end of next year as the Bank of England deals with the inflation rate,” he said.
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