Skills shortages are being felt throughout the UK, in sectors ranging from construction and manufacturing through to retail and hospitality. And analysis by the CBI shows that the shortages are at multiple skill levels, from entry level front of house workers, through scaffolders and carpenters, through to skilled workers in butchery and electrical engineering. In addition, job vacancies are higher in almost every sector than before the pandemic and unemployment is close to historic lows.
Many of the shortages that businesses are facing aren’t new, but they are becoming much more difficult to manage and the CBI estimates that they could take two years to resolve. A third of CBI members responding to their Industrial Trends survey are concerned that skilled labour will limit output in the quarter ahead – the highest share since the mid-1970s. This finding was echoed in CBI’s SME Trends survey with the share of firms citing concerns of skilled labour at a joint-record high (33%). Also, a third of consumer services firms felt that skilled labour would constrain their level of business over the year ahead – another survey record.
The real impact of staff shortages on real businesses
The CBI has heard from companies artificially restricting capacity because they can’t meet demand, like the hoteliers limiting the number of bookable rooms because they don’t have enough housekeeping staff and can’t get linen laundered. It’s also very visible to consumers when lead-in times for purchases grow significantly, like the kitchen manufacturer or the upholsterer taking nearly twice as long to deliver as they would do normally. There are also manufacturers delaying and cancelling planned expansions because they aren’t confident that they could hire the workforce they need.
Furlough ending as a solution?
Many commentators are expecting the 2m or so workers currently furloughed to provide a solution to staff shortages when the job retention scheme ends on 30 September 2021, however this is unlikely to be the case in reality. Businesses that have furloughed their staff have been contributing towards the financial cost of this since August 2020, so are very likely to bring these workers back otherwise they won’t get a return on their furlough investment.
Furthermore, if furloughed people do become the jobseekers of tomorrow, they are unlikely to have appropriate skills for all of the current vacancies so there will be a timelag due to retraining and upskilling needed for those looking to change career. However, many returning to work may prefer to remain within their previous occupation if possible.
Lastly, some furloughed workers are in specific geographic locations (e.g. near airport hubs) which may restrict their ability to fill some current vacancies at other locations.
Cumulatively, all of this suggests current shortages could take years to resolve.
HGV Drivers – EU workers a solution?
A shortage of drivers in the logistics sector is also disrupting supply chains across the economy in everything from food and health to utilities. But the problem cannot be resolved purely by allowing EU drivers to work in the UK. ONS labour market data indicates that since the start of the pandemic just 12,500 EU HGV drivers left the UK HGV driver workforce, but in the same period 57,000 UK HGV drivers have left for other careers. So the issue is not going to be resolved by attracting EU drivers back, more important is stopping UK drivers leaving.
Tony Danker, CBI Director-General, said:
“Labour shortages are biting right across the economy. Furlough ending is not a panacea, and meantime staff shortages are affecting business operations and will have a negative impact on the UK’s economic recovery.
“Building a more innovative economy – coupled with better training and education – can sustainably improve business performance, wages and living standards. But transformation on this scale requires planning and takes time.  The Government’s ambition that the UK economy should become more high-skilled and productive is right. But implying that this can be achieved overnight is simply wrong. And a refusal to deploy temporary and targeted interventions to enable economic recovery is self-defeating.”
