Labour supply problems affecting UK industries from construction and manufacturing to retail and hospitality could last for up to two years, the country’s largest employers’ group has warned.
The CBI said that its members predicted the worker shortages would not be helped by the end of the government’s job retention scheme this month, and there would be no quick fix given the time needed to train skilled staff.
Officials have told businesses they should use British workers, including those coming off furlough, rather than expect rules to change to temporarily allow in EU workers who had filled these positions in the past.
But CBI boss Tony Danker said that “standing firm and waiting for shortages to solve themselves is not the way to run an economy”.
He added that the UK needed to simultaneously address short-term economic needs and long-term economic reform. According to a report published on Monday, the CBI said that “inflexibility now just brings economic damage”.
The CBI blamed the shortages on a combination of the pandemic and Brexit, which had limited the numbers of EU workers.
The effect was being felt across the economy from entry level roles in hospitality to skilled jobs in engineering, it said. Vacancies were higher in almost every sector than before the pandemic, the CBI said, and unemployment close to historic lows.
Danker pointed to companies artificially restricting capacity because they could not meet demand, such as hoteliers limiting the number of bookable rooms because of a shortage of housekeeping staff.
“Some restaurant owners have had to choose between lunchtime and evening services when trying to make the most of summer,” he said, while “lead-in” times for purchases were growing significantly, with some kitchen manufacturers or upholsterers taking nearly twice as long to deliver as they would do normally.
The CBI said that manufacturers were also delaying and cancelling planned work because they were not confident that they could hire the workforce they needed. “These are future good jobs lost, hindering the government’s levelling up agenda where these sites were due to be outside of London and the South-East,” it said.
Many businesses warned that they would need to pass the extra costs from higher salaries on to consumers, it said, and in particular in construction and logistics. Critical utilities such as the transportation of chemicals needed to treat water, and in health sector supply chains, were also at risk.
The CBI has called for ministers to add HGV drivers to the shortage occupations list, which can use migrant workers, with limited and temporary access to visas for overseas employees to fill positions until British workers can be trained.
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It said that government could better target the lifetime skills guarantee, which offers free further education, and the wider national skills fund at occupations experiencing shortages to help job seekers retrain for jobs where they are needed most.
Shortages identified by CBI members include forklift drivers, meat processing operatives, fruit and flower pickers and butchers. Others include warehouse operatives, cleaners and housekeeping staff, chefs, scaffolders, carpenters, welders, electrical engineers and factory assembly workers.
Danker said that businesses also needed to work to invest in training, automation and digital transformation.
He said: “Labour shortages are biting right across the economy. These shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery.”