The global supply chain issues and the ‘long tail of Covid-19’, Brexit, have created the ‘perfect storm for UK firms’.
Although one in six jobs in hospitality are vacant, shortages have spread now across the entire UK economy.
Staff shortages are putting “severe pressure” on medium-sized businesses across the UK, rippling out from the transport, farming, and hospitality sectors to almost all parts of the economy, a new survey has warned.
The lack of staff was putting pressure on their ability to operate at normal levels, with reduced stock – due to the resulting supply chain disruption – hurting their business, more than a quarter of the 500 firms polled said.
Concerns over rising inflation as the Christmas trading period approaches were triggered by some firms. These companies had considered cutting production while others were planning to increase prices.
While others were introducing extra perks to lure workers, nearly a fifth said they were increasing wages to attract new staff.
However, the accountancy and advisory firm BDO released a report that said the knock-on effects for consumers could be “significant”, with nearly one-third of businesses saying the prices would need to rise in the next three to six months to make up for the disruption.
With more than a third of the firms who participated in the survey saying they had also cut down on the kinds of products and services on offer, a further third planned to do the same over the coming month unless the situation radically improves. A similar proportion expects stock ranges to be affected in the long-term.
Despite businesses blaming the pandemic and Brexit for the shortage of overseas workers, 38% said a lack of regional talent was hurting their ability to recruit much-needed staff. BDO partner Ed Dwan said:
“Brexit, global supply chain issues, and the long tail of Covid-19 have created a perfect storm for UK businesses. After navigating the challenges of the pandemic and hoping for some respite, businesses have found themselves facing more major disruption, with those across almost all sectors reporting staff shortages. This is an era of upheaval, and the challenges faced by the UK’s mid-tier – the engine of the UK’s economy – points to a long road ahead.”
All the challenges facing all tiers of British business are laid bare by the survey. With HGV driver shortages already resulting in fuel shortages across the country. Large companies such as Tesco warned last week that the labor crisis could lead to empty supermarket shelves and panic buying in the lead-up to Christmas unless the government relaxed immigration rules.
Prime minister Boris Johnson’s government has since introduced emergency visas that will allow a potential 300 fuel drivers to arrive immediately and stay until the end of March, and let a potential 4,700 further food haulage drivers arrive from late October and leave by the end of February.
Elsewhere, according to the latest business confidence survey from consultancy CGA and technology services firm, Fourth, the hospitality sector is also suffering from a lack of workers, with one in six jobs currently vacant.
Out of the 200 businesses in the restaurant, pub, and bar industries surveyed, only 18% said they were confident that they could recruit and retain the staff needed to run their businesses. From the 67% who felt secure about their talent prospects just three months ago, that is a dramatic drop.
About two-thirds said they expect to be hiring staff at a higher rate than usual this year, and were already struggling with absences, reporting that on average about 6% of staff were absent due to ongoing Covid risks, and were currently in isolation.
Compelled by the shortage, businesses are stepping up efforts to attract and keep hold of the staff, with three-quarters saying they have offered better pay, while two-thirds have “tried to cultivate the right working culture” to retain workers. Bosses who have increased pay said they had hiked wages by 11% on average for current staff, and 13% for new hires.
Higher wages would pile extra costs on the hospitality sector in the UK, which was already facing rising food, drink, supply, and utility costs, as highlighted in the report.
Karl Chessell, one of CGA’s directors, said that the figures illustrated the “full scale” of the hospitality sector’s recruitment and retention crisis and called for the government’s support. Chessell said:
“Thousands of businesses are now critically short of staff, while many of those who have sufficient labor face a fight to keep hold of it. Gaps at front and back of the house and fast-rising wage costs threaten to derail the industry’s recovery, and sustained, targeted government support is now urgently needed to tackle the problem.”