The phasing out of the Coronavirus Job Retention Scheme (CJRS), or furlough scheme, at the end of September will not help to ease staff shortages, the Confederation of British Industry warns.
Labour supply shortages could last for up to two years and will not be solved by the ending of the furlough scheme this month, Tony Danker, the CBI’s Director-General, has warned.
This is despite Business Secretary, Kwasi Kwarteng, arguing that the winding down of the furlough scheme will “ensure UK-based workers are better able to secure decent employment opportunities”, easing the shortfall in HGV drivers.
However, this is only one of many industries which are currently facing shortages in skilled staff, leading to various calls for action.
Specifically, the CBI has argued that combining skills policies with the highest unfilled vacancies and making the Apprenticeship Levy more flexible could help to ease this problem.
In addition, the Government adopting a more flexible stance when it comes to immigration may also ease shortages in staff. The body states this could be done through adding certain roles such as butchers and bricklayers to the Shortage Occupation list.
Without this, economic recovery could be stunted as labour shortages are a growing constraint on businesses’ plans to invest in the year ahead.
Additionally, companies have been urged to continue to put money towards learning and development through training as well as automation and digital transformation.
CBI also suggests that hiring talent from a diverse pool, as well as retaining this staff, could help recovery following the pandemic.
However, the body has warned that this approach will take time to yield results, meaning the UK Government must also change policies to alleviate short-term pressures in the labour market.
Tony Danker, CBI Director-General, said:
Labour shortages are biting right across the economy. While the CBI and other economists still predict growth returning to pre-pandemic levels later this year, furlough ending is not the panacea some people think will magically fill labour supply gaps. These shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery.
Building a more innovative economy – coupled with better training and education – can sustainably improve business performance, wages and living standards. But transformation on this scale requires planning and takes time.
The Government’s ambition that the UK economy should become more high-skilled and productive is right. But implying that this can be achieved overnight is simply wrong. And a refusal to deploy temporary and targeted interventions to enable economic recovery is self-defeating.
The Government promised an immigration system that would focus on the skills we need rather than unrestrained access to overseas labour. Yet here we have obvious and short-term skilled need but a system that can’t seem to respond.
*This research has been documented in the CBI’s ‘Latest Labour Market Insights’, published in September 2021.