Confederation of British Industry
A perfect storm

Covid crisis in the British labor market? When job vacancies are greater than job applications

The Confederation of British Industry (CBI), released its “Latest Labour Market Insights” explaining why the United Kingdom is, among other countries, the hardest hit by labour shortages currently. The main reason has to do with the fact that the British economy is facing at the same time the pandemic and the Brexit. CBI proposes several actions to deal with this situation that is affecting at multiple skill levels and will take years to resolve, impacting negatively on the UK’s economic recovery.

The main highlights of the CBI´s report should be as follows:

  • Labour and skills shortages are being felt right across the economy, and at multiple skill levels and there are concerns of negative impact in the economic recovery. Vacancies are higher in almost every sector than before the pandemic and unemployment is close to historic lows. According to CBI, a third of the companies that responded its July manufacturing survey were concerned that skilled labour would limit output in the quarter ahead, the highest share since the mid-1970s.
  • Many of the shortages that businesses are facing aren’t new (for instance, digital sector), but others are becoming much more difficult to manage in the Brexit context: For example, a shortage of drivers in the logistics sector is also disrupting supply chains across the economy in everything from food and health to utilities. Firms knew Free Movement would end when the UK left the EU. Sectors with a high number of EU workers knew that they need to change to attract more UK workers in the future as many EU workers will leave UK because of the Brexit. However, the pandemic disrupted their ability to prepare for and adapt to the new immigration system.
  • CBI provides several recommendations to take coordinated government and business actions to deal with this situation: For instance, it requires to the government greater agility in the UK’s training systems, adding more flexibility, or to immediately update the Shortage Occupations List in accordance with the CBI list, including drivers in the logistics sector. However, business also must accelerate its efforts, increasing investment in training (to meet the UK’s £13 billion a year reskilling deficit) and promoting talent, and retaining and developing all under-represented groups in the labour market.

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