UK faces labour shortage as CBI calls for immigration change

With the UK facing a drastic labour shortage in the wake of Covid-19, the UK’s representative body for industry has called on ministers to ease immigration controls. The group claimed such a move would help temporarily fill skill shortages in “key positions.”

The UK’s economic recovery from the winter lockdown was being undermined by a lack of skills in key positions, with mounting risks that the problem would continue for some time, according to the Confederation of British Industry (CBI). While the organisation agrees with the government’s ambition to make the British labour force more highly skilled and productive, it has warned that businesses can only train and hire more homegrown workers over time, and this cannot be achieved overnight – meaning the nation’s recovery could stall this autumn.

The CBI is Britain’s leading business lobby group, representing 190,000 businesses, with more than 7 million employees collectively. The end of lockdown, and the UK’s furlough scheme, have long been treated by the government as a guaranteed solution to force workers to fill gaps in the labour market. However, according to the CBI, while this might play well to the government’s support-base, this is unlikely to provide a meaningful solution.  

“Furlough ending is not the panacea some people think will magically fill labour supply gaps,” said CBI Director General Tony Danker. “Shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery.”

Danker also pointed to a report from the CBI, suggesting that while firms with furloughed workers would probably bring them back, this would not help companies struggling with labour shortages. The paper claimed that workers coming off furlough only to be made redundant would probably opt for their old occupation with other firms. Any that were to consider ‘filling the gaps’ would meanwhile need time to retrain into other sectors. As a result, there would be little immediate benefit.

If businesses will need to retrain large amounts of the workforce to adapt to new jobs, this will come at a cost which will limit their economic growth in the supposed economic recovery Britain is hoping to enjoy. Illustrating this, responding to the CBI’s manufacturing survey in July, one-third of firms said they were worried that a lack of workers would limit economic growth this autumn.

Danker remarked, “Businesses are already spending significant amounts on training, but that takes time to yield results, and some members suggest it could take two years rather than a couple of months for labour shortages to be fully eliminated.”

In order to provide a temporary solution, which could provide skilled labour to fill gaps in the market and build for growth, while the UK workforce retrains, the CBI has called on ministers to take action on visas for foreign workers and stop “waiting for shortages to solve themselves.”

Following a protracted Brexit process, where the government regularly reminded its supporters that one of its goals was to cut down on immigration from the EU to the UK, this is unlikely to be a popular request with the incumbent administration. However, according to Danker, refusing to deploy “temporary and targeted interventions to enable economic recovery is self-defeating.”

He added, “Standing firm and waiting for shortages to solve themselves is not the way to run an economy… We need to simultaneously address short-term economic needs and long-term economic reform.”

The CBI’s announcement coincides with further research from the Resolution Foundation, which suggested that staff shortages were unlikely to be solved by the end of furlough. The organisation warned that mismatches between the types of jobs that may no longer be needed, and vacancies elsewhere in the economy, would persist into next year unless the government intervened.