Nearly half of every British business is struggling to find workers

Recruiting Staff

Recruitment challenges are spreading through the economy with two fifths of companies reporting difficulty securing workers, according to a report by the Office for National Statistics.

In a sign that labour shortages are getting worse, the ONS found that 41 per cent of businesses with 10 or more staff said they struggled to fill positions in the two weeks to September 5, up from 32 per cent in early August.

Across all businesses, 13 per cent said they had experienced difficulty finding workers, up from 9 per cent in August.

Sectors that rely heavily on EU workers were the hardest hit. The ONS said that businesses in the hospitality industry were more than twice as likely to be suffering from shortages. Almost a third, 30 per cent, of hospitality businesses said that vacancies were proving more difficult to fill than normal.

Official estimates suggest that about 100,000 EU citizens left the UK during the pandemic and the migrant workforce has not recovered to its pre-pandemic size. This has constrained the supply of labour, as has the absence of almost 2 million people who are still on furlough and high levels of economic inactivity among young people, who are disproportionately represented in hospitality jobs.

Other sectors that rely on EU workers, such as healthcare and construction, have also been hit badly. Almost a quarter, 23 per cent, of healthcare companies reported difficulties, as did 15 per cent of construction firms.

In the transport and storage sector, 15 per cent of businesses said they were struggling to fill jobs. The ONS attributed this to a shortage of heavy goods vehicle (HGV) drivers.

“Businesses across all industries said that a lack of suitable applicants was the main reason for being unable to fill vacancies in late August 2021, with transport and storage firms the most likely to cite a lack of EU applicants specifically,” the report said.

It noted that a quarter of businesses reporting staff shortages cited the lack of EU applicants as a factor. Among transport and storage businesses, almost half — 46 per cent — blamed staff shortages on a lack of EU workers.

The economy has emerged strongly from lockdown, meaning businesses have rushed to expand production to meet renewed demand. Vacancies hit a record high over the summer, particularly in the hospitality and logistics sectors, where they were up 59 per cent and 32 per cent respectively compared with their pre-pandemic level.

However, filling roles has been made more difficult because the labour market is still smaller than it was before the crisis. A shortage of workers is forcing businesses to raise wages and, in some cases, offer signing-on bonuses.

Companies are also grappling with product shortages and supply disruption as they struggle to meet a wave of demand since the country emerged from lockdown. Official figures suggest that these challenges are already starting to weigh on the economic recovery.

Although growth is moderating now that the initial boost from the end of lockdown has faded, businesses are in a much stronger position than they were several months ago. A separate report by the ONS found that in the past two weeks, only a quarter of all businesses currently trading reported decreased profits compared with normal expectations for this time of year.

This was the lowest proportion since the ONS began recording results at the start of the pandemic.