The shortage of labour hampering the UK’s economic recovery from the pandemic could last for up to two years, the Confederation of British Industry (CBI) is warning.
And the issues will not be solved by the end of the Job Retention Scheme, said Tony Danker, the CBI’s Director-General.
The CBI has listed what it says are the priorities for both business and government, to help guard against labour constraints harming the UK’s economic recovery, including addressing the lack of HGV drivers.
The organisation said the government needs to mould its workplace skills policies towards sectors with the highest levels of unfilled vacancies. The CBI said the government should add greater flexibility to the Apprenticeship Levy and “use its own skill-focused immigration levers to alleviate short-term pressures”.
Labour shortages ‘biting right across the economy’
Danker said: “Standing firm and waiting for shortages to solve themselves is not the way to run an economy. We need to simultaneously address short-term economic needs and long-term economic reform.”
The CBI Director-General is also urging businesses to play their part when it came to long-term productivity reforms by continuing to invest in training, automation and digital transformation, along with doing more to attract and retain staff from a diverse talent pool.
Danker added: “Labour shortages are biting right across the economy. While the CBI and other economists still predict growth returning to pre-pandemic levels later this year, furlough ending is not the panacea some people think will magically fill labour supply gaps. These shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery.
Brexit compounds problems
“Other European countries are also experiencing staffing shortages as their economies bounce back. In the UK, many overseas workers left during the pandemic affecting sectors including hospitality, logistics and food processing. And new immigration rules make replacing those who left more complex.
“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.”
Short-term fixes and long-term reform needed
He added: “The CBI has heard from companies actively cutting 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. Meanwhile, some restaurant owners have had to choose between lunchtime and evening services when trying to make the most of summer.
“It’s also visible to consumers when lead-in times for purchases like kitchens or furniture double.
“Great economies like great businesses can walk and chew gum. We need short-term fixes to spur recovery and long-term reforms to change our economic model.”