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Fall in labour supply puts skills shortage into sharp focus, research finds

4 Jun 2021 By Francis Churchill

Employers urged by experts to look at their wage and benefits offering in order to attract more staff

The availability of labour has fallen at its fastest rate in four years highlighting a shortage of skills, which could slow down the UK’s economic recovery, a new report has revealed.

The latest Jobs Report from KPMG and the Recruitment and Employment Confederation (REC) found the number of candidates for both permanent and short-term roles fell at a substantial rate over the last quarter, with overall candidate availability declining at its quickest rate since May 2017.

There were also a wide range of skills in short supply, the report said. Accountants, engineers, drivers, nurses, and retail and hospitality workers were all among the professions where businesses said they had encountered skills shortages in the last month.



According to the report, businesses frequently blamed the shortfall in labour to a reluctance from potential candidates to seek new roles because of the ongoing uncertainty caused by the pandemic.

A reduction in European candidates and the number of staff on furlough were also cited as causes of the labour shortage.

The shortage comes as hiring activity among businesses surged in May, with demand for workers increasing at its fastest rate for over 23 years.


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There was an increase in demand in all of the sectors that the report monitored, with IT and computing, hotel and catering and engineering seeing the largest month-on-month increases in vacancies for permanent roles.

Kate Shoesmith, deputy CEO of the REC, said the last few months have shown a “consistent picture” of growing confidence among businesses as they put their hiring plans in motion.

But, she said, the spike in labour demand has put the UK’s skills and labour shortage into sharper focus. “This is the most pressing issue in the jobs market right now, and has the potential to slow down the recovery.

“Employers must think about how they can attract the staff they need, for example by looking at the wage and benefits package on offer – there is particular demand for more flexible and hybrid work,” Shoesmith added.

She also called on the government to do more to improve access to both work and training opportunities that lead to jobs. “This should start with careers information that signals where job openings are being created and funding for the relevant work-related training,” she said.

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