September 06, 2021

UK Industry body warns labor shortages will limit economic recovery

UK Industry body warns labor shortages will limit economic recovery

The CBI warned that labor shortages would limit the UK’s capacity to grow its economy post-pandemic over the next two years. While the shortage of lorry drivers has been particularly high profile, a wide range of industry sectors are struggling to recruit enough workers including: hospitality, logistics, agriculture, meat processing, care work and nursing, engineering, and manufacturing.

Tony Danker, CBI Director-General, said: “Labour shortages are biting right across the economy ... These shortages are already affecting business operations and will have a negative impact on the UK’s economic recovery. Other European countries are also experiencing staffing shortages as their economies bounce back. In the UK, many overseas workers left during the pandemic affecting sectors including hospitality, logistics and food processing. And new immigration rules make replacing those who left more complex.”

The CBI is calling on the UK government to adjust its immigration policy to widen the occupations listed on the Shortage Occupations list and help alleviate the current shortages. However, short term policy solutions can be challenging to get right as Abdurrahman B. Aydemir writes in his IZA World of Labor article Skill-based immigration, economic integration and economic performance:

“Some countries try to predict short-term skill ‘shortages’ and admit immigrants with corresponding skills. Identifying shortages is difficult and, in a dynamic environment with a sluggish policy response, such policies may be ineffective or counterproductive.”

For more information on the challenges involved in designing skills-based immigration policies, see our key topic pages on: