Recruiters concerned labour shortages are putting economic recovery at risk

With shortages hitting every sector of the economy and many staffing companies reporting the tightest labour market they’ve ever experienced, the Recruitment & Employment Confederation (REC) is calling on business and the government to take urgent action to solve the problem.

Recruiters have a significantly higher number of roles to fill than before the pandemic, with three in five (58%) having at least 30% more vacancies than pre-COVID. Almost every respondent to the REC survey (97%) said that it was taking longer than usual to fill those vacancies, compounding the problem. Half (50%) reported that it now takes more than a month to find suitable candidates.

Kate Shoesmith, Deputy CEO of the REC, said:

“Worker shortages are a huge problem for employers and their recruitment partners, across all industries and regions. Vacancy numbers are far higher than pre-pandemic, and it is taking much longer to fill them. This is putting the recovery at risk by putting capacity constraints on the economy, as last week’s GDP figures showed. In our survey, recruiters also highlighted a wide range of factors that have combined to cause these shortages – this is a complex problem with no one easy fix.

“As such, we will only solve these shortages through a collaborative approach. We’re glad that multiple government departments are coming together in a joint forum to tackle the issue, but to be effective it must also include business and industry experts. Government must allow more flexibility in the immigration system so firms can hire essential workers like drivers from abroad, and also improve training opportunities for lower-paid and temporary workers. Meanwhile companies need to focus on how they will attract and retain staff through improved conditions and facilities, not just pay.”

Recruiters reported a number of factors were affecting their ability to source candidates. The top reason was skills shortages (cited by 65% of respondents), followed by the new immigration rules (57%) and their clients not being able to offer competitive salaries (53%).

In response, the REC has set out a number of asks for both government and business to help solve this crisis: • Set up a cross-government forum including the Business, Education and Work and Pensions departments, as well as business organisations. This would restore the importance of workforce planning in the economic debate between business, government and other stakeholders, not only focusing on skills. • Broaden the apprenticeship levy and increase funding for training at lower skill levels. This would improve progression and transition opportunities for lower-skilled and temporary workers who need them most, and encourage business to do more here in the UK, not less. • Allow flexibility in the point-based immigration system and a visa route for lower-skilled workers, which would allow firms in the worst-affected sectors like logistics to access staff at times of pressing need. • Increased focus from businesses on workforce planning, staff engagement, attraction and retention policies. Firms need to raise workforce planning up to the senior leadership level, and work with key professional partners like recruiters to boost performance, productivity and staff wellbeing.

This also follows recent research from British Future, which found increasingly positive public attitudes towards immigration. Two thirds of the public (65%) agree that employers should be allowed to recruit from overseas for roles in shortage – showing that a more flexible immigration system would be popular as well as helping businesses to fill crucial vacancies.

Kate Nicholls, CEO of UKHospitality said:

“These findings are incredibly timely as we have seen a record high in vacancies across the economy. Hospitality was amongst the last sectors to emerge from restrictions and we are still playing catch-up. Yet it is clear that these labour shortages are affecting many sectors. A collaborative approach must be taken to tackle the causes of these. Some of these measures will be long-term – through reforms to education, careers advice and training – but Government also has the opportunity to look at shorter-term issues, such as the operation of the Kickstart scheme and immigration policy post-pandemic.”

Sally Gilson, Policy Manager, Skills at the Road Haulage Association (RHA) said:

“There is an immediate need for fully-qualified HGV drivers that can only be fulfilled by temporary visas if we are to keep the supply chain running through peak time. Significant investment is being made by businesses to train UK workers, however a lack of funding within lower-level qualifications has limited the ability for people to upskill and retrain. Government needs to invest in all qualification levels, not just level 3 and above.”