Britain’s post-Covid economic recovery will be delayed unless the UK Government takes action to tackle job market shortages, the Confederation of British Industry (CBI) has warned.
Labour supply problems may last for up to two years and will not be solved by the end of the Job Retention Scheme, Tony Danker, the business group’s director-general, added.
We need short-term fixes to spur recovery.”
Tony Danker, director-general, CBI.
In remarks following weeks of disruption to business operations and growing evidence of staffing shortages, Mr Danker has set out priorities for both business and government to guard against labour constraints harming the UK’s economic recovery.
Introducing the CBI’s latest labour market insights report, he said: “Shortages are biting right across the economy.
No panacea
“While the CBI and other economists still predict growth returning to pre-pandemic levels later this year, furlough ending is not the panacea some people think will magically fill labour supply gaps.
“These shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery.”
Britain not alone
He added: “Other European countries are also experiencing staffing shortages as their economies bounce back.
“In the UK, many overseas workers left during the pandemic – affecting sectors including hospitality, logistics and food processing. And new immigration rules make replacing those who left more complex.
“Building a more innovative economy – coupled with better training and education – can sustainably improve business performance, wages and living standards.
‘Self-defeating’
“Transformation on this scale requires planning and takes time. The government’s ambition that the UK economy should become more high-skilled and productive is right.
“But implying that this can be achieved overnight is simply wrong. And a refusal to deploy temporary and targeted interventions to enable economic recovery is self-defeating.”
Using existing levers under the government’s control – like placing drivers, welders, butchers and bricklayers on the Shortage Occupation List – could make a “real difference”, Mr Danker said.
He added: “The government promised an immigration system that would focus on the skills we need rather than unrestrained access to overseas labour.
“Yet here we have obvious and short-term skilled need but a system that can’t seem to respond.
“Great economies, like great businesses can walk and chew gum. We need short-term fixes to spur recovery and long-term reforms to change our economic model.”