Labour shortages could last for up to two years, CBI warns

Experts suggest the government takes a more flexible approach to filling gaps, while firms should use skills training and apprenticeships to solve the problem in the short term

The Confederation of Business Industry (CBI) has said that while the end of the furlough scheme this month would help firms struggling to fill vacancies, some of its members have suggested it could take years and not months for shortages to be fully eliminated.

Tony Danker, director-general of the CBI, raised concerns that “shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery.”

Since lockdown restrictions started to relax earlier this year, labour shortages have been reported across a number of UK industries.

There have been reports of restaurants that have had to choose between lunchtime and evening services, hotels being forced to limit bed linen changes and delay check-ins because of limited housekeeping staff, while a number of supermarket retailers have offered sign-up bonuses to attract HGV drivers.

Danker said that shortages have also been visible to consumers when lead-in times for purchases like kitchens or furniture have doubled.

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“Standing firm and waiting for shortages to solve themselves is not the way to run an economy,” he said. “We need to simultaneously address short-term economic needs and long-term economic reform.”

Danker also criticised the government’s new immigration system, arguing that it “can’t seem to respond” to the UK’s current short-term skills news and calling for drivers, welders, butchers and bricklayers to be added to the shortage occupation list.

Commenting on Danker’s remarks, Gerwyn Davies, senior labour market adviser at CIPD, said the recent increase in hiring activity and the related decline in labour supply suggested labour shortages might not persist to the same extent, especially given the imminent end of the furlough scheme.

Acknowledging that the labour shortages in the hospitality and transport sectors presented real “medium-term resourcing challenges”, Davies added that many of the UK’s labour shortages pre-dated both Brexit and the pandemic.

But, Kate Palmer, HR advice and consultancy director at Peninsula, warned there was a chance that staff shortages could worsen as the impact of coronavirus continued and the new immigration laws continue to be rolled out.

“Government intervention will be needed to curb the impact of this and help reduce the risk of potential business closures in the near future,” she said, suggesting in the meantime employers consider investing in training new hires to their desired standard, perhaps through apprenticeship schemes.

To address these shortages, Ian Moore, founder of HR consultancy Lodge Court, also told People Management that the government should adopt a more flexible approach to filling the gaps, as any business would do. 

“Having a blended approach of permanent, contract, and overseas staff, together with apprentices will help to plug the known gaps but this will take time,” he explained. 

In the short term, Moore suggested the government review not only immigration but also employment levies and taxation rules such as IR35 so they do not deter more individuals from changing careers while also encouraging others to stay in the UK.