Firms plead for help to beat jobs and supply chain crunch

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The government is facing mounting calls to help businesses as the crunch in the jobs market and disruption to supply chains threaten to stifle the economic recovery from the pandemic.

About three in four companies believe that access to labour is a threat to the competitiveness of the jobs market, according to an annual survey by the CBI, the country’s biggest business lobby group, and Pertemps Network Group.

Addressing the problem by making it easier for firms to fill short-term vacancies while boosting training for the long term was “vital”, the authors said.

Make UK, the manufacturing trade body, also warned about growing problems in supply chains.

Although the economy has staged a strong recovery from Covid-19 lockdowns, there are worries that problems are weighing on growth.

The latest is the surge in gas prices, which disrupted commercial production of carbon dioxide last week. It is used to stun animals for slaughter and in the food packaging process, leading to warnings about food shortages. There are also fears that a string of small energy suppliers will be crippled by surging gas prices and are on the brink of collapse.

Retailers are already suffering from the shortage of lorry drivers in Britain and the disruption to global supply chains caused by the Delta variant of the coronavirus in Asia.

The CBI and Pertemps surveyed 422 companies last month and found that 87 per cent were planning to recruit to fill permanent positions this year.

However, more than three quarters of respondents were concerned about a shortage of skills, while 47 per cent thought that labour costs were weighing on the competitiveness of the jobs market, up from 34 per cent a year ago.

Twenty-four per cent of businesses are expecting to lift pay above the rate of inflation, while 44 per cent are planning increases in line with inflation. Prices are rising sharply, with the consumer prices index of inflation climbing to 3.2 per cent last month from 2 per cent in July, a record jump.

Matthew Fell, the CBI’s chief policy director, said: “Whilst firms have been stepping up to address labour shortages through further investment and training, these steps take time and do little to ease the pressure firms are facing now. From logistics to hospitality, firms are feeling strain across the whole economy and expect this to continue not just for two months but two years.”

He called on the government to review the shortage occupation list, which gives employers more freedom to hire people from overseas.

A survey of 327 businesses by Make UK and BDO, the accountancy firm, found there was broad optimism in the manufacturing sector, with 42 per cent reporting robust output, up from 36 per cent in the second quarter and 9 per cent in the first three months of the year.

Yet Stephen Phipson, the Make UK chief executive, warned: “Supply chain shortages and the rapidly escalating increase in shipping costs are threatening to put roadblocks on the road to faster growth despite the current optimism.”

He also said the government’s plan to raise national insurance contributions to help pay for health and social care “was the last thing that industry needed, especially when firms need capital to invest and hire. Government should be putting in place measures to protect jobs and incentivise recruitment, especially for younger people.”