Almost half of UK businesses are experiencing staff shortages, according to new research. For many executives, the problems stem from Brexit.
According to a recent survey by the Institute of Directors, 44% of UK businesses are encountering such problems. Four in 10 attribute the shortages to a lack of a talent pipeline from the EU following the UK’s exit from the union.
Since 1 January 2021, employers that want to hire someone from outside the UK to work for their organisation must acquire a sponsor licence, which can cost from £364 to £1,820 for a small company or charitable organisation and £1,000 to £5,000 for a medium- to large-sized business, depending on an employee’s length of stay.
Fees for sponsorship licence applications and certificates of sponsorship issuance also apply, as does a minimum salary of £25,600 per year or £10.10 per hour, whichever is higher. An employee must speak English and fill an eligible occupation. Minimum salaries and skills demands may be lower for “shortage occupations” or if an applicant has a PhD.
Stonegate Pub Company is the UK’s largest pub owner, with 4,600 venues in its portfolio, of which it manages 820. The new criteria – which preclude pub and bar staff – is “ridiculously prescriptive”, says Tim Painter, the company’s HR director.
“I’ve looked at this in detail with my team and unfortunately I’ve come to the conclusion that it’s just not going to be an avenue for us,” he says. “It’s frustrating economically for us. I think it’s economically bad and socially bad for the country. It’s a huge shame that we’ve effectively closed our doors to so many people who can come and contribute economically and culturally.”
Stonegate employs around 15,000 people. Before Brexit, 10% were from the EU and the remainder were UK nationals, although there were regional differences across the country, particularly in London, where EU nationals represented 35% of the workforce. The group currently has 1,000 vacancies.
“We can’t run away from the fact that we’ve got a disconnect whereby the government is saying that’s it all about retraining people and the reality is that at this point in time, with the pathway to the European Union closed, there are not the people to train,” adds Painter.
Andy Dodwell, chairman of Corbetts The Galvanizers, one of the UK’s oldest galvanizing businesses, says the government has to listen. “The employment pool in the UK will not satisfy the majority of manual labour-driven businesses.”
Corbetts has increased its proportion of UK workers from 3% to 45% over the past year. “We’ve followed the guidelines of the government; we’ve done everything we can, but it’s not enough,” Dodwell says.
Corbetts currently employs 105 workers and has around 20 vacancies. Filling these jobs will merely help the business to fulfill its existing contracts, not meet its growth expectations and increased demand from customers, Dodwell says. “The government wants us to grow and wants us to use UK labour, clearly, but the reality is very much different,” he adds.
In response, Corbetts is providing transport to help employees get to work and creating initiatives – such as seasonal work and flexible work patterns – to attract workers from markets it hasn’t previously considered, such as students and working mothers. Similarly, Stonegate has put in place referral programmes that incentivise existing employees to recommend the business to friends and family, along with recruitment campaigns in its bars and pubs and social media campaigns promoting development opportunities on offer throughout the group.
Rob Hollyman, a director at Youngs Transportation and Logistics, has instead focused on increased pay deals and hopes that a starting annual salary of £40,000 will help to attract applicants to fill its 30 HGV driver vacancies. “It’s killing us. But what’s killing us more is trucks parked up. These trucks are £100,000 each, so if you’ve got six of them parked up because you haven’t got enough drivers, it’s a crisis.”
Youngs, which has three depots based in Purfleet, Southampton and Warrington respectively, employs 200 staff. Around 15 are non-UK workers, down from 20 prior to Brexit.
Some employers are hopeful that the end of the government’s furlough scheme on 30 September 2021 will increase the number of people in search of work. Research by the British Chambers of Commerce reveals that nearly one in five companies are considering staff redundancies post-furlough.
But Painter isn’t optimistic. “I don’t anticipate a return to the workforce for millions of people,” he says. While his company prioritises training to help develop workers, “even if you’re training people to progress through the business, at some point you’ve still got to pull in the people who are going to work at the bar level”.
Some areas of the economy simply don’t have the people to train, he adds.
“So the government can keep saying, ‘retrain people’, or ‘train people’, but you have to have people to train. And that is a systemic issue. I don’t think that the end of furlough is going to alleviate that systemic issue.”
Neil Carberry, chief executive officer at the Recruitment and Employment Confederation, thinks the solution lies in a new employee proposition from UK employers.
“In the long term there are answers here. We need to think about the way we sell jobs to British workers, we need to think about the terms and conditions of those jobs and we need to think about the training pathways.”
Employers must be mindful that the domestic labour force is likely to get smaller, says Carberry, not just because of Brexit and life-changing decisions during the coronavirus pandemic, but because baby boomers are retiring and being replaced by a smaller generation. This, Carberry says, is likely to result in a candidate-driven recruitment market.