UK Service Sector Hiring Spree Hindered by Skills Shortage

Firms in the UK's vast service sector have been taking on more staff as they ride the wave of economic recovery, though a skills shortage looms.

According to the Confederation of British Industry (CBI), 47% of the 151 service sector businesses surveyed said they had more staff on the books in May than a month before. That compares with just 12% who said employee numbers were down. Many reported intentions to hire more staff.

And optimism about business conditions struck a balance of +53% – the difference between those reporting improved sentiment and those saying the opposite – in the best reading since 1998.

It comes as the UK economic recovery strengthens, with 0.8% GDP growth in the first quarter of 2014, according to the Office for National Statistics (ONS). The Bank of England forecasts the UK economy to grow by around 3% in 2014.

Much of this will be driven by the service sector, which accounts for around three quarters of GDP.

"With a full year of growth under their belts, service sector firms are more upbeat than they have been for a long time," said Katja Hall, deputy director-general of the CBI.

"The recovery continues to strengthen with both consumer and business-facing firms taking on more staff and investing in training and IT.

"But a rising number of firms, particularly in business and professional services are having problems finding the right staff. This survey identifies a skills gap as a growing constraint on business expansion in the sector over the year ahead."

The CBI survey found that 33% of firms think the availability of professional staff – or lack thereof – is a problem for them.