UK ‘faces labour shortage’ as Covid and Brexit fuel exodus of overseas workers

Britain’s employers are struggling to hire staff as lockdown lifts amid an exodus of overseas workers caused by the Covid pandemic and Brexit, industry figures reveal.

According to the Chartered Institute of Personnel and Development (CIPD) and the recruitment firm Adecco, employers plan to hire at the fastest rate in eight years, led by the reopening of the hospitality and retail sectors as pandemic restrictions are relaxed in England and Wales on Monday.

However, in a sign of growing pressures in the jobs market amid rapid growth in consumer spending, the professional body for HR and people development said there had been a sharp decline in the numbers of EU workers, fuelling the risk of labour shortages.

Separate figures from Adzuna showed rapid growth in hiring, with almost 1m vacancies listed on the jobs website, up 18% on six weeks ago amid a rise in jobs in hotels, restaurants and in the events and leisure sector. But it warned there had been a steep decline in overseas jobseeker interest.

The jobs website, which is tracked by government officials for early warning signs from the labour market, found the number of overseas job searches from western Europe and North America had halved – a decline of about 250,000 – since February 2020, just before Covid-19 spread to the UK.

It said the decline was being led in particular by overseas interest in typically lower-paid service-led sectors, while some towns and cities have up to 20 jobs on offer per jobseeker. According to the research, Maidstone in Kent is the hardest place to hire, followed by Manchester, Cambridge and Oxford.

Andrew Hunter, a co-founder of the job search engine, said: “There is hot competition for staff, with many hospitality and retail workers having left the industry to look for more secure work after the ups and downs of the last year.

“There are also far fewer foreign workers seeking employment in the UK, with overseas interest in UK jobs more than halving from before the pandemic, hitting these industries hard. UK employers can no longer rely on overseas workers to plug employment gaps.”

The emerging evidence of labour shortages in the UK comes as US employers also struggle to recruit staff, with jobseekers put off hospitality jobs in particular due to low wages, safety concerns and harassment from customers over Covid safety measures.

Business leaders have warned that a lack of overseas workers after lockdown would put a “handbrake on the recovery”, with as many as 1.3 million estimated to have left the UK since late 2019 as many returned to their country of birth to see through the pandemic at home.

Gerwyn Davies, a senior labour market adviser at the CIPD, the professional body for HR and people development, said: “New limits to the supply of unskilled migrant labour and the switch to new ways of working presents many employers with an incentive to review job quality.”

According to the CIPD survey of more than 1,000 UK employers, the balance of employers expecting to add jobs, versus those planning to cut them, was 27% for the second quarter of 2021, up from 11% in the first three months of the year. It said this was the highest level since February 2013.

Unemployment in the UK has stabilised in recent months, helped by the extension of the furlough scheme until the end of September, after the fastest rise in redundancies on record in late 2020 when Rishi Sunak sought to scrap the wage support scheme.

The Bank of England expects the jobless rate to peak at almost 5.5% after furlough ends, lower than initial fears of a rerun of the 1980s when unemployment surged close to 12%. Unemployment stood at 4% before the pandemic struck, representing about 1.3 million people.

Davies said firms ought to respond to the “emerging threat of recruitment difficulties” by improving their employment conditions, such as training opportunities and the right balance of flexibility and security.

“By offering better-quality jobs, employers will be in a better position to attract and retain the staff they need, particularly in sectors that have traditionally relied on EU workers, the supply of which has fallen sharply,” he said.