Labour shortages still affecting businesses

New research has shown that three-quarters of UK businesses have been adversely affected by labour shortages over the past year.

Missing employees and worker shortage or labour shortages as as employers are looking for needed workers and workforce job vacancies concept on a puzzle background in a 3D illustration style.

David Sapsted

11 October 2022

Published on Tuesday, the annual Employment Trends Survey, compiled by the Confederation of British Industry (CBI) and the Pertemps Network Group, reported that labour shortages were "having a material impact on firms’ ability to operate at full capacity, let alone grow".

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Vacancies close to record highs

The report, which was conducted between August and September with 325 firms responding, was launched when data from the Office for National Statistics shows that vacancies in the UK over Q3 stood at 1,246,000; 46,000 lower than the previous quarter, but still close to a record high. The vacancies total remained higher than the number of people registered as unemployed, where the rate has fallen to 3.5 per cent, its lowest in almost a half-century.According to the CBI survey, almost half of businesses facing labour shortages had been unable to meet output demands, while 36 per cent had made changes to, or had reduced, the products or services they offered.

Solutions to the skills shortage conundrum

"When asked what measures Government should prioritise to help ease labour shortages, 46 per cent called for the Government to introduce incentives to help businesses invest in technology and automation to boost productivity, while 44 per cent wanted Government to grant temporary visas for roles that are in obvious shortage," reported the CBI.In the interim, 55 per cent firms reported investing in training to upskill current employees while a similar proportion were investing in base pay to retain or attract labour.Matthew Percival, CBI Director for Skills and Inclusion said: “It is crystal clear that labour market shortages are having a material impact on firms’ ability to operate at full capacity, let alone grow.“Businesses are pulling every lever they can to attract and retain employees, but this is making productivity-boosting investments like training and automation harder.“To go for growth and build a higher-wage economy we will need to ease shortages to create the conditions for higher investment. That means helping more British workers to overcome barriers into the workplace, like a lack of affordable childcare, and taking a pragmatic approach to immigration."

'Urgent overhaul'

Mr Percival added that it was "great to see" that the Government was looking at both issues and said that the starting point should be the "urgent" updating of the Shortage Occupation List to make it easier for companies to get visas for the overseas talent they so badly needed.Carmen Watson, who chairs the Pertemps Network Group, added: “The issues we are seeing in terms of labour shortages are not new and are not going to go away in the short term. The issues are being exacerbated by the current economic climate.“The figures in this survey should be a wake-up call to any businesses who are not already taking a long, hard look at their attraction and retention policies."

Subscribe now to Think Global People magazine and read David's insights on regional responses to and global tech skills shortages in the autumn issue.

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