UK labour shortages crisis: Will Johnson government ever wake up to reality?

The problem is staring the Johnson administration in the face.

In a survey published on Monday by the Confederation of British Industry and recruitment group Pertemps Network, 76 per cent of businesses reported access to labour as a threat to the UK’s labour market competitiveness – the highest proportion since the question was first asked in 2016.

Asked about current threats in a labour market context, 77% of companies cited access to skills. And 69% flagged concerns about the ability to move UK workers across the EU.

CBI chief policy director Matthew Fell declared: “As the UK’s labour market emerged from one crisis, it’s been plunged into another, with shortages holding back growth.”

Summing up the urgency of the situation, the CBI warned: “Supporting firms to plug the shortages gap in the immediate term is…vital.”

The chances of the UK Government deciding to stop sitting on its hands, as the labour market crisis deepens, appear to have diminished further with every rejection by an ideologically entrenched Johnson administration of sensible pleas from companies and business organisations on the front line.

While it would be a brave person who tried to fathom what was going through the minds of the Johnson Cabinet, it still seems from an external perspective that the UK Government feels unable to even admit there is a problem. Even though there is a mountain of evidence of the woes, and clear explanations of their cause from those who know,

The problem has, of course, been caused in no small part by Brexit. The Conservatives were warned of this impact before their decision to leave the single market, with the end of free movement of people between the UK and European Union, but they chose to ignore these expert views.

Now, following the post-Brexit immigration clampdown, there have been pleas from business leaders for the UK Government to at least mitigate the problem by adding the various roles for which employers are struggling desperately to find candidates to the “shortage occupation list”. This would make it easier for EU workers to fill these posts again. It beggars belief that the UK Government continues to shun a potential labour pool in nearby countries for ideological reasons, to the detriment of the economy and living standards.

The Road Haulage Association has, for example, requested that heavy goods vehicle drivers are added to this list. It estimates there is a shortage of around 100,000 HGV drivers in the UK and has flagged Brexit as a key cause of this shortfall. The shortage of lorry drivers has been causing chaos throughout supply chains.

However, the RHA’s solution to help address the problem in the short term has been rejected. A raft of sectors, including hospitality and food manufacturing, are facing similar challenges. Engineering too has seen labour and skills shortages exacerbated greatly with the loss of free movement of people between the UK and EU.

It is a frustrating situation indeed. Many businesses actually want to take on staff, even in these most difficult of times, but are finding this an exceptionally challenging exercise because of the labour and skills shortages.

Auchrannie Resort on the Isle of Arran revealed last week that staff shortages mean it is currently unable to operate at full capacity.

The award-winning hotel and spa resort is offering customers £1,000 in vouchers if they find employees.

Business development manager Gordon Hay told The Herald that Auchrannie was limiting its occupancy to around 80 per cent to 85% of its full potential through to the end of October, emphasising the main driver of this decision was staff wellbeing. He noted this had meant bookings had been “paused” for some dates this month and in October.

Many other businesses are having to take similar action. The landmark Battlefield Rest bistro on Glasgow’s south side has recently stopped opening on Sundays, even though this was a busy day, because of difficulties in finding staff.

Battlefield Rest owner Marco Giannasi flagged the “new assault course” created for his bistro by the coronavirus pandemic and Brexit, highlighting import and general supply-chain challenges as well as the recruitment difficulties.

He cited staff wellbeing as a key driver of his decision to close on Sundays.

This focus on the good of staff by Auchrannie and the Battlefield Rest, and others, is most heartening.

And this in some ways makes it even more disappointing that such businesses are being held back by the general UK labour market shambles as they experience strong demand for their offerings.

Mr Hay pointed out Auchrannie, which is employee-owned, had between 20 and 30 vacancies to fill. Its current full-time equivalent workforce is around 160.

Noting the resort had been operating at more than 97% occupancy after reopening following lockdown amid strong demand, Mr Hay said: “We have had to restrain occupancy at the moment simply because of the staffing situation.

“We have done this to look after our team. It has a big knock-on financial impact.”

He said the recruitment challenges were not the result of Auchrannie’s island location but were, rather, the same as those faced by the broader hospitality sector.

Mr Hay cited a combination of factors, including some people’s decision to leave the hospitality sector amid the coronavirus pandemic and Brexit.

He observed other sectors were also facing recruitment challenges.

Major difficulties created by labour shortages across various sectors have been underlined in a raft of surveys.

UK construction sector growth slowed sharply in August, amid “formidable” supply-chain pressures fuelled by Brexit and the coronavirus pandemic, as material and staff costs went “through the roof”, a survey this month from the Chartered Institute of Procurement & Supply showed.

CIPS director Duncan Brock said: “Material and staff costs went through the roof as job-hiring accelerated to fill the gaps in capacity left behind by employee moves, overseas worker availability and brought on by skills shortages.”

We underestimate at our peril the degree to which the ideology of this particular Conservative administration is at the root of the UK’s damaging skills and labour crisis.

The RHA’s urgent call for HGV drivers to be added to the Government’s skilled worker shortage occupation list as a short-term measure was responded to as follows in a letter from senior Conservative ministers: “Large numbers of EU nationals have settled status or pre-settled status in the UK and continue to be an important part of the lorry driving workforce. But for the future workforce, we will need to develop people resident in the UK as opposed to specifically providing visas for this group of workers.”

This captures the hidebound and damaging ideology of the Johnson administration.

And, from a quick read of this response, it is also plain that it is no kind of constructive reply at all.

The simple fact of the matter is the short-term labour shortage crisis in certain sectors is an emergency. Talking about a “need to develop people resident in the UK” is of no use at all to businesses and sectors facing enormous challenges right now.

Mr Fell 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.”

Two years is a long time indeed for a damaging debacle such as this to continue.

Mr Fell added: “Immediately reviewing and updating the shortage occupation list so that firms can temporarily fill the most significant vacancies would provide businesses with some breathing room. In the longer term, skills policies should help workers gain the abilities needed to fill shortages.”

There are some strange ideas around in this post-Brexit world. Some Brexiters seem to think that any British person can do any job, at the drop of a hat, these days. However, skills and training are required (this reality has not been changed suddenly by Brexit) and the gaining of such expertise takes time where people do not yet have it.

Of course, even over time, there is no doubt the clampdown on immigration from EU countries will bear down very heavily indeed on UK growth.

Limiting the working-age population in this way will cap the UK’s overall growth potential dramatically. This is utterly demoralising, given the certain need to maximise tax revenues to support an ageing population.

Of course, this wilful, long-term damage to the UK economy stems from the ideology of Tory Brexiters, many of whom will in any case be insulated from the effects on living standards of their poor decisions by their personal circumstances..

In terms of the short-term crisis, you sometimes wonder whether the UK Government is incapable of grasping the problem, its causes, and its scale, or is just giving the impression it does not comprehend these matters to avoid admitting its mistakes and U-turning on its anti-immigration stance. It is almost impossible to see any other explanations for its intransigence but who knows?

So it seems the Johnson administration either needs to wake up, or get its act together and put its patriotic pride and politics to one side, or both, to address a crisis that is severely hampering the economy’s ability to recover from the utterly dismal impact of the coronavirus pandemic. Urgent action is required. Sadly, it seems ever-more unlikely that the UK Government is going to either realise or admit that its rhetoric is shot full of holes, embrace reality, and take the necessary action.