Labour shortages are holding back growth

The CBI submitted key insight on the UK labour market at the select committee from Department for Business, Energy and Industrial Strategy (BEIS) – and joined the select committee to give evidence on the UK labour market, looking at how skills and labour shortages are delaying the economic recovery post-pandemic.

With labour shortages continuing to affect firms across the economy, and the latest labour market statistics showing a record number of vacancies, the CBI shared how the Government can help to alleviate the effects of shortages for businesses.

To ease labour shortages and other structural labour market challenges, the government and business need to work in partnership to deliver an economic model where growth is driven by productivity improvements rather than just increasing the size of the labour market, which has been the trend since the financial crisis.

The key issues affecting businesses:

• Recruitment and retention challenges are affecting a range of sectors across the economy – with labour shortages ranked as businesses’ primary concern for the next quarter
• Shortages have been affecting firms’ costs and profits. While businesses have been changing their practices to attract and retain talent in a tight labour market, targeted immigration and skills reform – including a new Shortage Occupation List – is needed
• Labour market inactivity rates increased during the pandemic, representing a new potential labour pool for employers. Businesses and government both have a role to play in supporting those who want to join the workforce.

Are shortages affecting your business? Join our Future of Work Conference to hear how other businesses like yours are navigating recruitment and retention challenges.