UK firms are being squeezed by the biggest labour shortage in 30 years, which is being driven by a combination of record employment, the impending Brexit vote, a weaker pound and the government’s pledge to cut EU immigration after Brexit.
A survey of more than 6,000 employers across the country by the British Chambers of Commerce (BCC) found more than four-fifths (81%) of manufacturers struggled to hire the right staff in the final months of 2018.
With the UK currently experiencing record levels of employment, firms are facing a shortage of skilled labour just as the effect of Brexit has led to a dramatic drop in the number of qualified workers coming from the EU.
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Last month, the Home Secretary Sajid Javid drew a sharp rebuke from business leaders after the government’s long-awaited White Paper on post-Brexit immigration pledged to cut those coming from the EU for work by 80%, while extending the minimum salary threshold to £30,000 a year.
At the same time, the weaker pound has also made it less attractive for foreign nationals to work in Britain.
Amid signs the UK could be facing a full-blown labour crisis, Adam Marshall, the director general of the BCC, said: “Business concerns about the government’s recent blueprint for future immigration rules must be taken seriously – and companies must be able to access skills at all levels without heavy costs or bureaucracy.”
The crisis is also not constrained to manufacturing with the UK service sector, which includes banks, hotels and restaurants and accounts for about four-fifths of the economy, also reporting weaker domestic sales.
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The BBC warned “that higher costs meant more manufacturers were expecting to raise prices”.
However, “the latest snapshot raises the prospect that Brexit uncertainty may perversely benefit the economy in the short-term by prompting companies to raise their activity levels in preparation for potential disruption from the UK leaving the EU on 29 March without a deal”, says The Guardian.
