UK employers struggle with worst labour shortage since the late 90s

UK employers struggle with the worst labour shortage since 1997 as the number of overseas workers drops due to Brexit and Covid. The labour market is also being hit as the UK reopens from lockdown.

Sounding the alarm over the risks to economic recovery from acute labour shortages, the Recruitment and Employment Confederation (REC) and the accountancy firm KPMG said the number of available workers plunged in June at the fastest rate since 1997.

“We need action from businesses and government to reskill and upskill furloughed and prospective workers now more than ever, as the increasing skills gap in the workforce has the potential to slow the UK’s economic recovery,” said Claire Warnes, head of education, skills and productivity at KPMG UK.

After recent coronavirus restrictions were eased companies are finding that this has led to bottlenecks. There are also less EU workers available due to post-Brexit immigration rules, and ongoing issues with borders being opened and closed due to varying levels of the virus.

“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,” said Jane Gratton, head of people policy at the BCC.

Neil Carberry, the chief executive of the REC, added: “The jobs market is improving at the fastest pace we have ever seen, but it is still an unpredictable time. We can’t yet tell how much the ending of furlough and greater candidate confidence will help to meet this rising demand for staff.”