Plan to tackle 'perfect storm' of staff shortages

• Firms must continue to strengthen inclusion and invest in skills and automation, the long-term solutions to shortages
• Government should immediately update the shortage occupations lists for roles including butchers, bricklayers, and welders to protect the competitiveness of the UK's economic recovery
• And align immigration and education policies to help workers gain skills that are needed for shortage roles.

In a speech to the Recruitment and Employment Confederation’s (REC) Annual Conference, the crossbench peer will diagnose the root of current labour market shortages. Hauliers, hospitality, and food & drink are among the worst affected.

Lord Bilimoria will identify a combination of factors, ranging from the paradoxical effects of the job retention scheme to EU workers not returning to the UK amid the COVID crisis.

He will highlight the importance of training, reforming the Apprenticeship Levy, and creating new technical education routes into careers. Lord Bilimoria will also praise the role of the recruitment industry, which helps place over a million workers in employment, supporting £86 billion in gross value added to the economy. Amid news of lunchtime sittings at restaurants being cancelled owing to staff shortages, the crossbench peer will say action is needed now to bolster the UK’s competitiveness and growth potential. An adequate supply of staff is critical for securing the UK’s recovery.

Outlining the challenge from labour market shortages, Lord Bilimoria is expected to say:

“As the weeks go by, more and more businesses are re-opening. It’s fantastic.

“But as lockdown restrictions lift, we’re also seeing a surge in the demand for labour - and we know many businesses are already struggling to recruit.

“The latest REC/KPMG report shows overall candidate availability during the past quarter declined at its quickest rate since 2017.

“It’s a big challenge, not just for individual businesses, who can’t find the people they need, but also for our longer-term economic recovery.

“We’ve got a perfect storm of factors coalescing. During the pandemic, many workers from overseas left the UK to return home – hitting the UK’s hospitality, logistics, and food processing industries particularly hard.

"The UK’s immigration system is also a barrier to hiring people from overseas to replace those who may have left.

"Meanwhile covid has added major uncertainty. With some sectors locked down longer than others, experienced workers have moved to businesses that stayed open.

"Other people are understandably wary of changing jobs right now.

"And the furlough scheme ─ a lifeline, for millions of employers and employees alike, is becoming a strange paradox for policymakers.

"The more successful the Job Retention Scheme is – and it has been very successful so far – the smaller the talent pool for businesses, here and now.

“Together, all these factors pose a problem. Whether that’s in hospitality, where the shortage of chefs – already a problem pre-pandemic – is now even more acute.

“Or transport, where hauliers are desperately searching for more drivers.

“Or in food and drink, where a leading food supplier told us they’ve seen EU workers leaving during the pandemic – and despite offering apprenticeships, they can’t attract new workers to fill the gaps.

“And of course – on top of all this, the UK’s longstanding skills shortages haven’t gone away.”

Businesses must first help themselves, Lord Bilimoria is expected to say:

“As a starting point, this means opening up new routes into business, whether it’s a new apprentice scheme or widening access for candidates with technical qualifications.

“And since covid – we know so many are innovating, like law firms introducing virtual shadowing schemes during lockdown so junior lawyers could still access training and opportunities.

“Second – businesses can tackle labour shortages by investing in innovation and technology.

“Third – employers can look to recruit from a wider talent pool, by working with organisations and charities – like Mind, Business in the Community, Movement to Work, or DisabilitySmart

“By considering those who might otherwise be overlooked in the world of business – based on their gender, ethnicity, or background, or supporting the CBI’s own campaign – ‘Change the Race Ratio’ to increase ethnic minority inclusion across business.

“After launching last year, it’s been amazing to see the momentum – with almost 100 leading employers signed up so far, and counting.

“And above all we know that strong employer/employee relations is central to attracting and retaining the best staff, driving the best results.”

Government can act too, Lord Bilimoria is expected to say:

“We’ve identified two big things the UK government can do straight away, to help make sure the UK is open for business, and to get our economic recovery on the right track.

“First – we need government to immediately update the ‘Shortage Occupation List’.

“Last year – in September 2020 – the Migration Advisory Committee recommended that we add certain roles to that list.

“Butchers, bricklayers, and welders for example.

“Today, almost a year on, we worry those are exactly the same sectors facing shortages now.

“Businesses would also welcome a commitment to review the list annually, to keep it responsive to the ebb and flow of skill demands across the whole of the UK’s economy.

“And where there are clear, evidenced labour shortages, businesses should be able to hire from overseas.

“An evolving Shortage Occupations List could help.

“But it’s really important to stress - workers from overseas aren’t, and shouldn’t be, our only response to labour shortages. Investing in skills here, too, is vital. It’s not an either/or choice. We must do both to ensure our firms have the access to people they need to succeed.

“So the second step is to align our immigration and skills policies – by using the Lifetime Skills Guarantee and the National Skills Fund to help workers gain skills for jobs on the Shortage Occupations List.

“Doing more to support British workers, and directing them to qualifications we know are in short supply.

“Businesses have embraced the Government’s Kickstart scheme, but more time is needed to match young people to start these opportunities. So the scheme should be extended by 6 months.

“Together, these measures could begin to ease the most immediate labour shortages holding firms back, as well as laying the groundwork for a competitive UK economy in the decade to come.

Concluding his speech, Lord Bilimoria is expected to say:

“I never thought – as we come out the other side of the pandemic – I’d be giving a speech about staff shortages.

“Business and government together can solve this shortage. And if we do, I have every confidence this could be the best decade yet for the UK economy.”

28 June 2021