Worker and skills shortage threatens UK reputation

Britain’s shortage of suitable workers is getting worse. And this doesn’t bode well for businesses or the country’s reputation spelling trouble for future investment.

A new report on jobs by the Recruitment and Employment Confederation (REC) and Markit shows a sharp drop in workers available to fill permanent and temporary positions in April. It showed that whilst there was a steep decline for both categories, there was a “quicker pace of reduction” in permanent candidates. The data showed there was a broad range of sectors experiencing recruitment challenges and those with the most demand are engineering, IT & computing and the nursing/medical/care sectors.

In a statement about the report, REC chief executive Kevin Green said “demand for staff is growing within all sectors and all regions of the UK, but there are fewer and fewer people available to fill the vacancies”. Green pointed to a number of factors behind the sharp decline in worker availability. He explained that Brexit uncertainty was leading to more people already in work feeling hesitant to move jobs as well as the weak pound and “lack of clarity about future immigration rules” putting off EU nationals from taking jobs in the UK.

Earlier this year, a report by Mercer found that Britain’s ageing population meant that businesses are already facing an “unprecedented labour shortage”. And Brexit would only make this worse if it led to a reduction in immigration. A House of Lords committee also heard evidence from a number of industries saying that there weren’t enough British workers willing or with the skills to fill jobs.

Whilst this new report reflects the UK’s shortage of workers, the sharp decline suggests that it’s getting worse. Green warned of the “wider implications” of this such as the risk to the “exceptional reputation UK engineering enjoys globally” because “employers can’t find people with the skills they need”. He called on the next government to address the “ever-shrinking pool of suitable candidates” and said it is “vital that the future immigration system is agile enough to reflect and adapt to evolving labour market needs”.

If British business is to thrive, then whichever party forms a government after 8 June needs to address the ever-shrinking pool of suitable candidates by investing in skills and career advice for UK jobseekers as well as safeguarding access to the workers we need from abroad.

It is vital that the future immigration system is agile enough to reflect and adapt to evolving labour market needs.

Kevin Green, chief executive of REC

This is a sentiment shared by the British Chamber of Commerce (BCC). In research published last month, the BCC found that businesses were struggling to recruit workers. BCC director general Dr Adam Marshall warned that “while we’d like to see greater investment in training across the board, without access to a sufficient talent pool, companies are restricted in their development ambitions”.  And BCC’s head of economics Suren Thiru told BBC News that rising business costs is “deterring business investment, including investment in training their staff”.

The reports are clear that more investment is needed in addressing the skills shortages in the UK. However, signs are that Brexit is already negatively impacting the economy and will therefore inhibit businesses’ ability to invest – not just in their workers but also in growing. Shrinking the talent pool even further will not fix this. Indeed, the evidence suggests that it will make it worse.

In a report on Brexit, the British Hospitality and Tourism Industry warned that many businesses in their sector would fail without immigration and that this would eventually lead to businesses failing and a loss of jobs.

… in the short term without immigrant workers from the EU and elsewhere many businesses in the sector will fail, taking all their jobs, local and migrant, with them.

British Hospitality & Tourism Industry Brexit Strategic Response November 2016

Eventually, a shortage of workers may not be such a problem if what Britain faces instead is a shortage of jobs.

Meanwhile, despite the evidence showing Britain needs immigration, Theresa May has re-stated the Tory commitment to cut net migration to the “tens of thousands”. This would reduce current net migration levels by two thirds. As Stephen Bush writes in the New Statesman, this pledge is not just “unachievable”, it’s also “unhinged”. Unless of course their point is that the Tories want “to hammer the economy and condemn the nation’s elderly to age in misery”.

Immigration: A target but still no policy & no evidence to support it

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