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UK firms warn staff shortages biggest threat as Brexit begins to bite

·3 min read
Access to labour was the key factor that threatens the UK’s competitiveness as a place to employ people, both currently and in five years time. Photo: Peter Cziborra/Reuters
Access to labour was the key factor that threatens the UK’s competitiveness as a place to employ people, both currently and in five years time. Photo: Peter Cziborra/Reuters

British businesses have said that the impact of the ongoing staff shortages poses the biggest threat to labour market competitiveness.

In a recent survey, conducted by the Confederation of British Industry (CBI), 76% of UK firms said access to labour was the key factor that threatens the UK’s competitiveness as a place to employ people, both currently and in five years time.

It was the highest proportion since the question was first asked in 2016.

On the back of this, the CBI urged the UK government for more support for businesses to plug the shortage gap in the immediate term, calling the move “vital”.

However, the research did reveal that the UK’s jobs outlook is strengthening somewhat, with a net balance of 50% of firms expecting to grow their workforce in the next year.

Out of the 422 respondents, surveyed between 16 – 31 August 2021, 87% said they are actively planning to recruit permanent roles this year, with almost half expecting increased levels of hiring. Only 9% expected lower levels of recruitment for such roles compared to the past year.

Read more: UK businesses criticise self-isolation changes for food supply chain workers

The data also found that nearly seven in 10 firms (68%) are planning to either increase pay in line with or above inflation – making the rebound the highest since the question was first asked in 2009.

In August, inflation in the UK rose to 3.2%, up from 2% in July, to hit its highest level since March 2012.

The rise was more than economists’ expectations for a reading of 2.9%, and reflected a jump in food and drink prices, compared to August 2020, when chancellor Rishi Sunak’s “eat out to help out” discount scheme cut the cost of restaurant meals.

The 1.2 percentage point increase between July and August was also the largest since records began in January 1997, however, the Bank of England (BoE) said the surge was “manageable and temporary”.

Meanwhile, almost three in five firms (59%) said that they were keeping COVID-19 safety measures in place to support employees’ confidence to return to offices. As employees return, businesses are expecting changed working patterns to stay.

Compared with working pre-pandemic, over three quarters of UK firms expect the use of hybrid working to increase, 40% expect full time remote working to increase, and 58% expect informal flexibility to increase in their organisation.

Read more: UK delays full post-Brexit border checks from EU

As well as staff shortages, other key areas of concern for businesses were access to skills, and the ability to move UK workers across the European Union.

“After a challenging year it’s encouraging to see the jobs market rebound. With demand returning, businesses both small and large, have put their recruitment plans into action. But as the UK’s labour market emerged from one crisis, it’s been plunged into another, with shortages holding back growth,” said Matthew Fell, CBI chief policy director.

“Whilst firms have been stepping up to address labour shortages through further investment and training, these steps take time and do little to ease the pressure firms are facing now.”

Watch: What is inflation and why is it important?

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