Unemployment is high in Grimsby and yet they cannot find enough lorry drivers. What does the demand and supply of truckers reveal about the UK labour market? Read the synopsis below and try the activity.

source Economist August 20th 2016

Research suggests three problems facing the labour market for truckers in Grimsby : discouraged workers, unambitious employers and a government that does too little to help people without the necessary skills into jobs.

Government statistics suggest the trucking industry is short of 45,000 drivers. The Economist comments: “only 17,000 new truck-drivers’ licences are issued each year, half of what is needed. The result of this lack of personnel is that haulage firms must turn down work. Products turn up late. With three times as much freight transported by road as by rail and water combined, this is bad news for consumers”.

Workers do not want the jobs because of security issues – lorries are targets for robbers and illegal immigrants – and the long hours the driver os asked to work – including weekends. It seems that 60 hour weeks are often worked.

Could employers raise wages to a high enough level to attract more drivers into the market? . The average hourly wage in road-freight transport is £10.44, below the overall UK average of £11.80. Research by the Economist suggests that pay has fallen in real terms since 2008.

Road haulage companies argue that competition is acute both from home and from abroad. Supermarkets, a key source of demand, also are driving costs down.

If productivity improved, then the demand for labour would also rise. Yet road haulage companies have not invested in new lorries as they should. The Economist observes that ‘the fleets are getting older: in 2006-15 the proportion of vehicles on the road aged ten or more years rose from 23% to 29%’.

Statistics also show that young people don’t want to become lorry-drivers. Only 1% of heavy-goods drivers are under 25, compared with 12% of the total employed population. So the gap is filled from EU labour – Poland, Romania, Bulgaria.

There are also costs to gaining the skill of being a trucker. It costs  £3,000 to train as a new “C+E” driver, the highest licence classification. Only some firms will pay for this up front.

Activity: Draw a demand and supply curve for truck drivers illustrating the paradox that demand for truckers is high but workers in Grimsby are not forthcoming. What elasticity values for demand and supply might we speculate for the truckers’ labour market?