John Lewis boss urges retirees back to work to help UK economy

·2-min read
John Lewis chair Dame Sharon White. Photo: John Lewis
John Lewis chair Dame Sharon White. Photo: John Lewis

The boss of John Lewis has urged people who retired during the coronavirus pandemic to go back to work to help the UK economy avert a recession.

Dame Sharon White called on the government to encourage retirees, mostly those in their 50s, to return to the labour market, warning that staff shortages meant more inflation was inevitable.

The John Lewis chair noted that an exodus of people in that age group who left the workforce during the COVID crisis is fuelling wage inflation.

White told the BBC: "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, looking for work, you’ve inevitably got more inflation and more wage inflation."

She added she had "never seen anything quite like the economic environment" at the moment, adding it was vital that Britain avoided an extended period of low productivity and low rates of growth.

White also said introducing flexible retirement plans and skills courses for older workers to retrain in different jobs could encourage people back into work.

Read more: Bank of England announces biggest interest rate hike in 27 years

The call comes after regular pay saw the biggest plunge in more than 20 years when rising prices are taken into account, according to the Office for National Statistics.

Between March and May, pay excluding bonuses was down 2.8% from a year ago when adjusted for inflation, marking the fastest rate since records began in 2001.

Last week, the Bank of England warned of a prolonged recession in the UK after delivering its biggest interest rate lift in since 1997 to combat runaway inflation, which it predicts will hit 13% later this year.

Threadneedle Street hiked rates for the sixth consecutive month by 50 basis points from 1.25% to 1.75% – their highest level since December 2008.

BoE governor Andrew Bailey has also previously warned about a wage spiral and called on workers to refrain from asking for a raise.

Speaking to BBC's Radio Four last week to explain why the central bank lifted borrowing costs the most in 27 years, Bailer expressed concerns that inflation is building in the UK because firms are having trouble hiring the people they need and feel the need to raise their prices.

"The real risk we’re responding to is that the inflation becomes embedded and it doesn’t come down in the way that we expect," Bailey told the Today program. "We’ve had a shrinkage in the labor force. I talk to businesses a lot. The first thing they want to talk to me about is that businesses have trouble hiring people, and that is still going on. They’re also saying to us actually they’re not finding it difficult to raise prices at the moment. That can’t go on."

Watch: How does inflation affect interest rates?