U.K. Staff Shortages Worsen as Lockdown Loosening Spurs Hiring

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British companies are finding it more difficult to fill jobs as they expand hiring following a loosening of lockdown rules, a friction that may weigh on the strength of the recovery.

Lloyds Banking Group Plc said its monthly survey of 1,200 businesses showed that almost a fifth report difficulties getting staff with the right skills. Their expectations for employment rose for a fifth month to the highest in 2 1/2 years. A separate report from the jobs site Adzuna showed 1 million job vacancies -- and 2.2 applicants for every position.

The findings indicate that 16 months of coronavirus restrictions and Britain’s exit from the European Union have inflicted long-term damage on the labor market. Companies hit hardest such as hospitality and trucking firms are struggling to bring back talent now that they’re allowed to start working again.

“If we don’t act quickly now to help employers to fill jobs and the unemployed to take them up, then we could be setting a time bomb for next year of labor shortages, higher inflation and long-term unemployment,” said Tony Wilson, director of the Institute for Employment Studies, which released the report with Adzuna.

U.K. Staff Shortages Worsen as Lockdown Loosening Spurs Hiring

The findings present a challenge to Prime Minister Boris Johnson’s government, which is set to taper back its furlough support for wages starting Thursday. That, economists say, will increase in unemployment, since companies that were propped up by the benefit will be forced to make decisions about which people they still need.

The diverging fortunes of workers -- with some in short supply and others chasing too few openings -- suggests the pandemic has upended the way many businesses trade. Industry groups are increasingly vocal about the places where they see shortages, telling ministers they should fund training for those jobs.

Butchers, bricklayers and welders are in especially short supply, the CBI, Britain’s biggest business group, said earlier this week. It’s asking the government to name more of those occupations as on a list of shortages that qualify for looser immigration rules.

“We’ve got a perfect storm of factors coalescing,” said CBI President Lord Karan Bilimoria. “During the pandemic, many workers from overseas left the U.K. to return home. Meanwhile Covid has added major uncertainty.”

U.K. Staff Shortages Worsen as Lockdown Loosening Spurs Hiring

The findings add to evidence of a strong recovery from the worst recession in three centuries, albeit with a much smaller pool of available workers. Labor shortages are exacerbated by an exodus of European staff and workers bowing out of lower-pay, less secure jobs, especially in hospitality. Some also left the country ahead of the deadline on Wednesday for EU citizens living in the U.K. to apply for settled status.

Adzuna said hiring is being driven by “pandemic jobs” like warehouse staff, logistics, IT and public services along with a strong rebound in hospitality, manufacturing and construction.

Meat processors have reported cutting production, and a “catastrophic” absence of drivers is disrupting deliveries. Restaurants and pubs have struggled to attract waiters to chefs. Adzuna said more than 300,000 new job adverts were placed in last week alone.

Despite the bounce-back in hiring, twice as many job-seekers than before the pandemic are now vying for each job. That’s stoking concerns that a recruitment crisis and unemployment crisis may unfold simultaneously.

While firms struggle to fill jobs, more than 2 million people are struggling to find work, Adzuna and the Institute for Employment Studies said.

U.K. Staff Shortages Worsen as Lockdown Loosening Spurs Hiring

Some parts of the U.K. are disproportionately facing prospects of longer-term unemployment -- especially former industrial centers and inner cities where more than five unemployed people are chasing every job.

“Many of the people currently out of work aren’t matching up to the jobs on offer, despite an acute talent shortage,” said Andrew Hunter, co-founder of Adzuna. “This means many jobs are lying unfilled and accumulating, inflating overall hiring volumes.”

“We may see another spike in jobseekers when furlough wraps up in September. Some employers won’t be able to afford to keep existing staff on.”

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