Labour and skills shortages risk significant damage to UK economy

New research has shown that if labour and skills shortages are not addressed, it could cost the UK economy £30 billion every year.

The Recruitment and Employment Confederation (REC) say that these shortages will reduce our productivity and ability to invest, grow and raise wages sustainably.

Neil Carberry, Chief Executive of the REC, explained, “We haven’t had to look far for evidence that labour shortages have the power to bring segments of the UK economy to their knees recently.

“From chaos at airports to driver shortages and NHS waiting lists growing – the underlying issue of labour shortages has burst out into the open. The modelling we are launching today shows the damage that could be done if we don’t solve these shortages – more than £30 billion in lost potential every year, as well as lower productivity, lower wage growth and rising inflation.

“Only growth can create the environment to maintain public services and a low tax rate – no government can afford to leave £30bn on the shelf.”

Carberry added, “But neither government nor business can do this alone. It’s time for both to get the ‘people stuff’ right and get serious about long-term workforce thinking. For companies, that means prioritising workforce planning at the highest level, investing in a skills pipeline – co-operating with other firms and local education providers to do it – and treating recruitment with the importance it deserves. An approach to staffing that only focuses on cost is a highway to nowhere.

“For its part, government needs to create the environment for businesses to be able to invest and thrive – with a long-term workforce strategy that includes skills, immigration, good local transport links and robust support for people who aren’t currently working.”

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