CBI: Govt inaction over labour shortages will hamper economic recovery

Labour supply problems could last for up to two years and will not be solved by the end of the Job Retention Scheme, the CBI has warned. Following weeks of disruption to business operations and growing evidence of staffing shortages, the CBI’s director-general has set out priorities for both business and government to guard against labour constraints harming the UK’s economic recovery.

A lack of HGV drivers has dominated the headlines but the challenge extends well beyond to include other skilled professions, the group warned. The resulting disruption to supply chains has led to increasing calls for action in the run up to Christmas.

“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,” Tony Danker said.

“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.

“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.

“Let’s be clear - employers back existing government schemes to get people back into work. And businesses are already spending significant amounts on training, but that takes time to yield results, and some members suggest it could take two years rather than a couple of months for labour shortages to be fully eliminated.

“Using existing levers at the UK’s control – like placing drivers, welders, butchers and bricklayers on the shortage occupation list – could make a real difference. The government promised an immigration system that would focus on the skills we need rather than unrestrained access to overseas labour. Yet here we have obvious and short term skilled need but a system that can’t seem to respond."


Image courtesy BSI

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