Half of all businesses struggling to recruit new staff, survey finds

About half of all firms are struggling to recruit new workers and business confidence is dipping, according to new research.

The Centre for Economic Performance (CEP) at the London School of Economics and Political Science also found that one in five are having issues retaining existing staff, as employees look for new opportunities elsewhere.

Experts said the data suggests the Government must do more to encourage firms to invest in training workers, through tax credits and changes to the apprenticeship levy scheme.

The report’s co-author, Swati Dhingra, said: “Policies that provide incentives for human capital investments will support job transitions across sectors, occupations and firms.

“Improving skills will address labour shortages, although this may be a more long-term fix, promoting productivity, wages and social mobility.”

Businesses have seen revenues increase since the end of the last lockdown restrictions in the spring, with volumes increasing every month since April.

However, the trend has stalled since October, with about an equal number of companies reporting an increase or a decrease in business.

Wages have also increased as companies attempt to retain staff, the report found, and some sectors have been hit hard by new post-Brexit rules in particular, although these have been minimal.

Just one in ten firms report that the UK’s immigration regime is causing labour shortages, while one in five businesses have reported that long-term skills gaps are affecting their ability to recruit workers.

About a third of firms say they have responded to labour shortages by raising wages, and nearly half expect labour shortages to last more than one year.

One in five say they believe the shortages will stretch for at least two years.

Josh De Lyon, research assistant at CEP, said: “After the Covid-induced lockdowns in 2020, economic activity has been on the rise in 2021 as vaccines have been rolled out.

“Yet the recovery in the UK has been restricted. Global supply chains have been disrupted by factory closures, fractured transport networks, labour disruptions and rising energy prices.

“In the UK, dealing with these issues has been made harder by Brexit, which significantly increased barriers to trade, investment and migration with its closest and largest economic partner.

“And now, the Omicron variant is likely to increase uncertainty about the recovery, particularly in some sectors like hospitality.”