Three-quarters of UK businesses are concerned about the impact of labour shortages, according to CBI and Pertemps’ annual survey.
Almost nine in 10 organisations plan to recruit permanent staff this year, while almost half (46%) believe they will recruit more people this year than last. Just 9% expect lower levels of recruitment this year.
But access to skills and the ability to move workers across the EU ranked top of employers’ current concerns, according to the report, now in its 24th year.
Seventy-seven percent of businesses said skills shortages were an issue, while 69% were worried about the lack of freedom of movement across the EU.
Ranking the three factors most important to labour market competitiveness, 89% said finding enough staff with the right skills. Others cited a flexible labour market (47%) and a healthy workforce (35%).
More than two-thirds (68%) of employers plan to increase pay in line with or above inflation – the highest rebound in pay intentions since this question was first asked as part of the survey in 2009.
Labour market
In terms of working location and patterns, 76% said they expected hybrid working patterns to increase, while 40% thought full-time remote working would increase. Fifty-eight per cent foresee “informal flexibility” going forward.
But Matthew Fell, the CBI’s chief policy director, said investment in training to address labour shortages did “little to ease the pressure firms are facing now”.
“From logistics to hospitality, firms are feeling strain across the whole economy, and expect this to continue not just for two months but two years,” he said.
“Immediately reviewing and updating the Shortage Occupation List so that firms can temporarily fill the most significant vacancies would provide businesses with some breathing room.
“In the longer-term, skills policies should help workers gain the abilities needed to fill shortages.”
The CBI also warned that simply raising wages to attract staff would impact labour market competitiveness. Almost half (47%) said they felt rising labour costs were impacting their ability to be competitive, compared to 34% in 2020.
That said, 56% argued that the Low Pay Commission should aim to match inflation next year when it makes its recommendations on the National Living Wage. Just over a quarter (27%) felt the LPC’s target of increasing NLW to two-thirds of median earnings by 2024 should be delayed, however.
CBI skills and inclusion director Matthew Percival said: “Businesses are committed to raising living standards and think the Low Pay Commission should protect the real terms value of the minimum wage rather than recommend unstainable larger increases.
“It’s too early to know the impact of the pandemic on the national living wage target for 2024, so this will need to be kept under review.”
Despite a bullish outlook from some employers on recruitment, many still have fears over their job security, with the end of the government’s Job Retention Scheme due at the end of this month.
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A report published today by the Centre for Economics and Business Research showed its index on job security to have fallen by 1.6 points to 91.5, indicating that people are more pessimistic about job prospects.
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