Nearly every UK business struggling to fill roles amid worker exodus

Nearly every business in the UK is struggling to hire staff in a sign that the country’s slimmer workforce since the pandemic is pegging back growth, a new survey out last night indicated.

Some 80 per cent of 5,000 firms surveyed by the lobby group the British Chambers of Commerce (BCC) said they ran into hurdles when trying to get new staff in.

Small and medium sized companies were the most likely to be hobbled by being unable to source new talent, with just over nine in ten telling the BCC they faced challenges when filling roles.

The new data illustrate how the around 500,000 people who have left the UK labour market since the beginning of the Covid-19 crisis are railroading firms’ recruitment plans.

Most of that workforce exodus has been driven by a surge in long-term illness. Experts have warned people within that bucket are unlikely to return to the jobs market anytime soon.

“People shortages are a massive issue and employers can see little sign of improvement,” Jane Gratton, head of people policy at the BCC, said.

“The high number of unfilled job vacancies is damaging businesses and the economy. Firms are struggling to fulfil order books and turning down new work,” she added.

Britain’s economy is performing much better than analysts’ predicted at the start of the year, but the BCC’s data shows it could be producing more goods and services if firms were not being tied down by worker shortages.

Businesses have resorted to hiking wages to attract and retain staff, with Office for National Statistics data showing private sector pay growth is up around seven per cent on an annual basis.

While those pay increases have partially cushioned the massive hit to living standards as a result of inflation racing to multi decades – still in the double digits at 10.1 per cent – it has raised the risk of the rate of price rises staying high over the long term.

Some 67 per cent of businesses say labour costs are a source of inflationary pressure, the BCC said, while a similar amount identified swelling energy bills as another source of cost tensions.

The Bank of England has signalled that if wages keep rising rapidly, it will have to keep raising interest rates, which it has already done eleven times in a row, taking them to 4.25 per cent.