Employers have been facing new challenges trying to fill their staff vacancies, as growth slowed to a six-month low in August. A shortage of staff, pingedemic workforce disruption and disturbances to the supply chain have hampered UK businesses, forcing growth to slow down to the lowest rate in half a year. The Covid pandemic and Brexit have both contributed to the current National workforce shortage, with furloughed workers finding new jobs and EU nationals returning to their home countries.
National Workforce Shortage
The Office for National Statistics (ONS) says: ‘There were an estimated 953,000 job vacancies in May to July 2021, a record high, having grown by 290,000 compared with the previous quarter and 168,000 more than its pre-pandemic level (January to March 2020).’ Employment numbers have risen rapidly, however the national workforce shortage has put increased pressure on businesses. “An abnormally large slowdown in overall activity in August offers a stark warning to the UK economy that the accelerated levels of growth we’ve seen earlier this summer are not sustainable,” said Duncan Brock, group director at the Chartered Institute of Procurement and Supply (CIPS). “It was the slowest output expansion for six months, and the worst shortages of staff and materials on record are mostly to blame.” A survey conducted by CIPS showed that output was 14 times more likely than normal to be reduced due to staff shortages. Mr Brock said: “Finding the right skills was difficult for businesses, meaning that job seekers had the pick of the bunch in terms of opportunities.
“The service sector was hiring at a brisker pace than any time in the past 25 years and stronger wage demands followed suit, which resulted in business costs climbing again. Manufacturers paid more for shipping their goods, and supplier delivery times were rivalling the height of the disruption last year.”
Immigration Bottlenecks
Rapid reopening of businesses keen to trade after the staged lifting of lockdown restrictions, plus the departure of overseas workers due to Covid and Brexit has caused problems for transport, hospitality, construction industries and more. This has caused the worst National workforce shortage since the late 1990s. The bottlenecks have come about as fewer EU workers are travelling or remaining in Britain because of Covid-19 border controls and the government’s post-Brexit immigration rules. A sharp rise in hiring demand led to an unprecedented fall in the availability of candidates in June. Increased hiring, Brexit, economic uncertainty due to the pandemic and the furlough scheme have all affected the workforce that is available in the United Kingdom. The furlough scheme is due to close completely at the end of September. At its peak almost 9 million jobs were furloughed during the first wave of the pandemic, with about 5 million in the wave in January this year. A growing number of businesses have started increasing pay to try to lure staff, particularly lorry drivers, after a drop in available workers put a squeeze on UK supply chains and left some retailers and restaurants struggling to maintain stock and serve customers. The labour crunch has been blamed on Covid as well as post-Brexit immigration policies that have made it harder for foreign workers to secure visas in the UK. Meanwhile business confidence across the eurozone dipped in August, which some analysts have attributed to fears over the Delta variant. “With expectations of an autumn resurgence of the virus, stricter corona measures are an important downside risk to the outlook,” said Bert Colijn, an ING senior economist.
Workforce Discouraged
An estimated 1.3 million non-UK workers have left the country during the pandemic. Business leaders said easing post-Brexit immigration rules could help address the National workforce shortage, but also called for further investment in skills and training from the government to increase the numbers of domestic candidates. Jane Gratton, head of people policy at the British Chambers of Commerce (BCC), said part of the issue for employers was that skills shortages that had existed in Britain before the pandemic were becoming apparent once more as the economy reopened. “The encouraging increase in job creation across the manufacturing and services sectors is being held back by recruitment difficulties at all skill levels, jeopardising growth and productivity,” she said. Upskilling and reskilling can deliver noticeable boosts in productivity for organisations. Investment is needed to provide workers with the training they need to match the needs of the businesses most in need of new workers. However some experts believe that a domestic workforce is being put off seeking employment in certain sectors that have developed reputations for low pay and poor conditions in recent years, and that concerns over continuing high rates of Covid-19 are also having an impact. If a National workforce shortage continues, this could lead employers to raise wages to attract new workers. It’s possible this could fuel rising inflation if businesses raise their prices to accommodate higher wage bills. However, there is debate about how permanent bottleneck pressures will be as the economy bounces back from lockdown and how this will affect the workforce more permanently.
Day Release Inmates to Solve Meat Industry Shortage
In the meanwhile abattoirs, butchers and meat processors are preparing to employ prisoners and ex-inmates to fill in their labour shortages. The Association of Independent Meat Suppliers (AIMS) says businesses will seek to enroll prisoners who are part of the Release On Temporary Licence (ROTL) programme. ROTL is a risk-assessed temporary release programme that inmates in open prisons use to gain work experience to help them in their transition back into the community. Some members of AIMS already employ inmates on ROTL, so this is an extension of that programme. Turkey processing giant Bernard Matthews has previously formed links with HMP Norwich and regularly visits the prison as part of its recruitment cycle, to assess candidates and offer inmates contracts to start upon release. The food manufacturing industry has also looked to employ former armed service personnel. However, the number of people taking up jobs has been low. The government recently announced the expansion of a kitchen training scheme across jails in England and Wales. The Clink Kitchens Scheme sees prisoners train in professionally run prison kitchens for up to 35 hours a week while working towards professional qualifications to help them find employment on the outside. However, the food industry is not the only sector to witness a shortage of workers. A lack of approximately 90,000 HGV drivers placing increasingly unsustainable pressure on retailers and their supply chains. In a letter to Kwasi Kwarteng, the business secretary, the British Retail Consortium (BRC) and freight trade group Logistics UK have warned that consumers will suffer unless the government intervenes.
Christmas Turkeys
We are already hearing how Christmas supply is expected to be affected by current workforce bottlenecks, without rapid intervention. The shortage of HGV drivers is set to impact gifting supplies and the turkey industry will face challenges this year due to workforce shortages. Industry professionals are already warning to stock up now on gifts and non-perishable supplies to avoid potential disappointment this Christmas. Many HGV hirers are offering increased incentives such as a one-off £1000 bonus to be paid upon successful appointment in an effort to tackle the National workforce shortage.
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