Worker shortages plaguing the UK economy pose a significant long term risk to the British jobs market.
Over three quarters of businesses are concerned poor access to workers will hold back the UK labour market’s competitiveness, the highest proportion on record, according to research by the Confederation of British Industry (CBI) published today.
Matthew Fell, chief policy director at the CBI, said businesses are expecting worker shortages to last for “two years.”
“As the UK’s labour market emerged from one crisis, it’s been plunged into another, with shortages holding back growth,” he said.
A lack of workers has led to severe supply chain disruption, leaving some sectors of the economy struggling to secure enough stock to deliver normal services. Higher prices for raw materials is also scuppering production.
Half of businesses expect to increase staffing levels next year, while 77 per cent of companies are concerned about access to skilled workers, according to the CBI’s research.
The organisation called on the government to update the shortage occupation list to help businesses fill vacancies.
According to the Office for National Statistics (ONS), the number of vacancies rose by more than 1m over the last three months, the first time they have risen by more than a million since records began.
Companies are intending to ramp up pay in a bid to attract talent. Over two thirds of businesses are planning to increase pay by at least the rate of inflation, which hit 3.2 per cent in last month according to the ONS.
However, some firms may struggle to absorb higher staffing costs as a result of taking on large amounts of debt to cope with the financial impact of the Covid crisis.
Matthew Percival, director of skills and inclusion at the CBI, said: “Pay rises need to be underpinned by productivity or risk being passed on to customers through higher prices.”