Study reveals more than 80% of UK business owners dread labour shortages

Since the UK left the EU in 2020, businesses have been struggling with various challenges, including multiple lockdowns and financial instability caused by misguided tax reforms proposed by one of the five Chancellors of the Exchequer who have served in the past three years.

On the other hand, one of the most pressing issues affecting businesses today is the persistent labour shortages caused by the post-Brexit points-based immigration system.

According to a recent survey by Finbri, 83.51 per cent of UK business owners are concerned about the impact of labour shortages on their companies, with 47.69 per cent being "concerned" and 35.82 per cent being "strongly concerned". The shortage of low-skilled workers from the EU has hit businesses hard, forcing them to contend with new trading conditions and unprecedented difficulties.

Stephen Clark, Bridging Loan Broker at Finbri, said labour shortages have become an ongoing conversation among businesses since Brexit, and the issue is only likely to worsen in the short term, offering little to contribute to the UK economy's rebound.

According to Clark, the lack of available labour, declining productivity, falling earnings, and a general "loss of competitiveness" for many businesses are interconnected issues that need urgent attention.

Another Office for National Statistics (ONS) survey found that 13.3 per cent of UK companies face a labour shortage. Industries with the highest percentages of enterprises experiencing a labour shortage are lodging and food services (35.5%) and construction (20.7%).

The labour shortage makes it difficult for businesses to develop, invest, and grow, according to Finbri. Due to rising labour prices, business owners must find alternative, often more expensive, ways to fill the 1.19 million openings, the Finance Broker firm emphasised, noting that the COVID-19 pandemic has exacerbated the situation, with several businesses suspending or firing employees, reducing the number of available labour.

The finance broker firm further shed light on the factors that have contributed to labour shortages in the UK. The pandemic was and continues to be a factor in the UK's labour shortages, the firm added. According to Finbri, several businesses were compelled to either suspend or fire their employees due to the economic slump. Furthermore, the firm stressed that hiring foreign workers had become more challenging for companies due to travel bans and lockdown measures.

According to the ONS, one in 20 people in the UK who are neither working nor seeking a job are affected by "Long COVID". This figure was expected to double in the year before August 2022. The labour shortage issue is expected to remain a top concern for UK businesses in the coming years, Finbri stated, especially with the implementation of the post-Brexit points-based immigration system that would restrict who may enter the country and find employment.

Finbri also mentioned how travel bans and lockdown measures have made it more challenging for companies to hire foreign workers. The post-Brexit points-based immigration system has restricted the entry of low-skilled employees from the EU, which has created a greater reliance on highly skilled individuals from outside the EU.

To address this issue, the Chancellor has proposed reforms in the Spring Budget to encourage people to return to work, including those with persistent medical conditions, parents, people in their 50s and older, people with disabilities, and those receiving Universal Credit. The government is also considering requiring yearly physicals for workers and developing a special visa for occasional agricultural workers.

Government ministers are contemplating requiring yearly physicals for workers to help with the labour shortage. The government also plans to develop a special visa for occasional agricultural workers.

As the current labour shortage continues to be a significant issue for many British businesses, some procedures can be enhanced or changed to boost the effectiveness of hiring staff. Finbri pointed out that companies can improve their methods of recruitment, some of which include providing a prompt response time to job applications and questions.

Finbri also suggests outsourcing the hiring process to specialised organisations with a track record of discovering the best individuals. Additionally, the company encouraged using different means, including social media, job boards, and digital recruitment, to connect with various candidate types.

The survey revealed that UK business owners are still optimistic about their workforce growing during the coming year. Nevertheless, labour shortages are likely to persist for some time. The COVID-19 pandemic and the implementation of the post-Brexit points-based immigration system have only made matters worse. Businesses must discover innovative ways to fill open positions and improve their operational efficiency to stay competitive in the global market, Finbri stated.