October 25, 2023

  • • More than two-thirds of UK businesses (71%) have been hit by labour shortages in the last 12 months.
  • • 77% of businesses believe access to skills threatens the UK’s current labour market competitiveness.
  • • Nearly 7 in 10 firms (69%) that responded to the survey are investing in training to upskill current workers to ease skills gaps and labour shortages.
Over the past year, labour shortages have hit businesses, disrupted plans and stifled growth. According to CBI’s Employment Trends Survey, carried out in partnership with Pertemps, more than a third of businesses (38%) have been unable to seize new opportunities despite demand.

The impact of shortages extends further: 22% have had to hold back on their investments and 12% have even had to shrink their business.

So it’s clear that labour shortages are continuing to impact businesses’ ability to grow. But there’s also sign of the lasting damage these shortages are having. Over the past five years, the UK has become a less attractive destination for investment and business growth. A resounding 76% of businesses expressed their concern on this – and that’s the bleakest outlook in years.

Access to skills (77%) and access to labour (66%) are the two most prominent threats to the UK’s labour market competitiveness. The rising cost of living (61%) continues to be a concern – although it has eased from 69% in 2022.

Looking ahead five years, 82% of respondents anticipate that access to skills will remain a persistent threat to labour market competitiveness. But firms are taking action to ease the impact on their business and increase their resiliences:

  • 68% of companies are investing in training to upskill current employees
  • 65% are investing in leadership and management capabilities to engage and retain employees
  • 60% are turning to technology and automation to boost productivity and reduce reliance on labour.

Yet, the government also plays a pivotal role in alleviating the shortages in the economy. Nearly 7 in 10 businesses (68%) want the government to introduce incentives for investing in technology and automation to boost productivity while 65% of companies want the government to reform the Apprenticeship Levy, offering employers greater flexibility to spend levy funds on a variety of training programmes.

The two are clearly linked, as firms will need to help employees add to their skills to adapt to technology. It’s why reform of the Apprenticeship Levy is one of our key asks ahead of the Autumn Statement, alongside measures to focus on helping firms adopt to technology in the first place.

But if labour shortages are stopping so many businesses meet demand, and blocking our chances of driving sustainable growth, we need a game-changing strategy that can transcend our reliance on ever-increasing headcounts. That needs to happen before we fall behind our international counterparts. And it needs business and government to work together to unlock the full potential of our nation’s workforce and economy.

Source: Confederation of British Industry
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