Member Article

Economic recovery held back by labour shortage, say business leaders

Business leaders in Coventry and Warwickshire say the shortage of people to fill job vacancies is holding back the economic recovery.

The unemployment rate fell from 4.7 per cent to 4.6 per cent in the three months to July, with more than one million job vacancies on offer across the country – the highest for 20 years.

Sean Rose, head of policy at the Coventry and Warwickshire Chamber of Commerce, said firms in the city and the county are struggling to recruit.

He said: “The unemployment rate was widely forecast to reach much higher levels in the wake of the Coronavirus crisis but it has defied those expectations.

“We now have a situation where businesses want to take on people to help them grow again, which will mean the economy can get back to and go beyond pre-pandemic levels – but they can’t get the staff.

“It’s an issue across a range of sectors and it’s vitally important that the Government works to find solutions in order to help businesses fill those vacancies.

“That includes everything from training to making it easier to bring in overseas workers to fill roles where there is a chronic shortage of skilled staff.

“It’s positive news that unemployment remains lower than expected and that businesses are keen to rebuild so we have to grasp this opportunity and make sure firms have the people they need to grow.”

British Chambers of Commerce Head of Economics Suren Thiru said: “The jobs market has continued its summer revival as demand for workers has surged following the easing of Covid restrictions.

“But record vacancies also highlight the acute hiring crisis faced by many firms. With Brexit and Covid driving a more deep-seated decline in labour supply, the end of furlough is unlikely to be a silver bullet to the ongoing shortages.

“These recruitment difficulties are likely to dampen the recovery by limiting firms’ ability to fulfil orders and meet customer demand.

“Although the peak in unemployment will be lower than previous downturns, with rising cost pressures and an increasingly onerous tax burden likely to stifle firms’ recruitment intentions, a notable rise in job losses as furlough ends remains probable.

“Consequently, we expect the UK’s unemployment rate to rise to a peak of 5.1 per cent by early 2022 – equivalent to another 174,000 people out of work.

“Whether furloughed workers are returning to the workplace or the wider labour market after the scheme ends, it is vital that employers and the government provide the support and training they need to be re-engaged and productive.

“Expanding the Shortage Occupation List will also help businesses access the skills they need when they can’t recruit locally.”

This was posted in Bdaily's Members' News section by Matt Joyce .