Labour shortages to continue amid 'sky-high' demand for workers

Business confidence is up, which means firms will be looking to hire new staff well into 2022, the Recruitment & Employment Confederation (REC) said. This also means current labour shortages “look set to continue for some time”.

As per REC data, in the three months to August, companies’ confidence in making hiring and investment decisions was net 25.

This remains a historically high rate of improvement, though the pace is lower than in the previous rolling quarter.

“Businesses’ confidence levels remain robust and that has led to sky-high demand for workers,” said Neil Carberry, CEO of the REC.

“This survey suggests that firms remained confident in late August that capacity constraints would not slow the recovery down,” he added.

Hiring intentions over the next three months rose by three percentage points to net 25, while demand for the next four to 12 months increased to net 30.

Demand is growing for both temporary and permanent staff, but permanent hiring now leads the way after starting its recovery much later than for temps.

In August, six in ten (58%) of those who recruit temporary agency workers were experiencing a shortage of suitable candidates to fill current roles.

This report comes as the UK struggles with a shortage of labour, in particular lorry drivers, which is hitting many sectors and causing disruption to fuel supply.

The government recently said up to 10,500 lorry drivers and poultry workers can receive temporary UK visas in hopes of preventing supply chain issues in the holiday period. It also said around 4,000 people will be able to take advantage of training courses to become lorry drivers.

“It was good to see the government listening to business and introducing some measures to help ease HGV [heavy goods vehicle] driver shortages– though driving is not the only sector being severely affected by labour shortages,” said Carberry.

He said “we’d like to see a collaborative approach going forward, with government departments and industry experts coming together in a joint forum to try and resolve this crisis.”

Meanwhile the furlough scheme will end on Thursday and official forecasts throughout the pandemic have predicted that unemployment will rise.

But the Resolution Foundation has said it is unlikely companies will make all of their fully-furloughed staff redundant.

Read more: How end of furlough scheme will impact UK job market

"The labour crunch risks squeezing the life out of the economic recovery," said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

"Any hope that the end of the furlough scheme might be the magic wand to solve the supply chain crisis is likely to be wishful thinking," she said, adding: "We are likely to be facing a rash of redundancies, and the increase in the number of available workers might ease some of the hiring issues, but there is likely to be a big mismatch of skills and experience between those ejected onto the jobseekers heap and the positions available."

The REC survey also showed that business confidence in the UK economy rose by one percentage point to net: 19, suggesting that issues caused by worker shortages don't appear to have dented confidence in the economy overall.

Watch: How the UK government furlough scheme is changing