Solving worker shortages is UK’s ‘national challenge’

Solving chronic worker shortages that are hamstringing businesses from reviving the economy is “our national challenge,” according to the chief of the UK recruitment industry’s trade body.

A shallower pool of workers, mainly the result of long-term sickness caused by Covid-19, people retiring early and younger Brits heading back into education, is resulting in firms struggling to fill roles.

The volume of job ads last week hit a new record high this year of nearly 1.7m, according to a survey published today by the Recruitment and Employment Confederation (REC).

“The current glut of adverts… reflects the challenge firms are facing. Labour shortages are constraining many firms’ ability to hire and grow,” Neil Carberry, chief executive of the REC, said.

“Our national challenge is that there are over half a million fewer people in the labour force than before the pandemic – solving this participation problem will be essential to get the UK economy growing again,” he added.

The Institute for Employment Studies thinks the problem is worse than that, estimating “there are still around 1.15m fewer people in the labour force than on pre-pandemic trends”. 

High vacancies indicates businesses that want to expand production to capitalise on high demand are unable to do so due to a shortage of candidates.

That friction in the jobs market is holding back the UK economy, which is already in the teeth of a slump.

Gross domestic product has not risen since January and fell in March and April. The Bank of England yesterday said the economy would shrink this quarter and experts have warned the UK may tip into recession this year.

The UK’s expected weakness is likely to be caused by high inflation prompting consumers to cut spending. Signs of that softening emerged in this week’s Office for National Statistics jobs figures, which revealed unemployment jumped to 4.2 per cent over the last month. 

Probation officers are in the shortest supply, the REC said, followed by tool makers and dental nurses.

The Confederation of British Industry, the country’s biggest business group, earlier this week urged the government to draw up a new list of sectors that are struggling the most with worker shortages.