Labour market shortages are holding Yorkshire businesses back - Beckie Hart

The CBI has long heralded growth as the bedrock for economic prosperity, so it’s welcome to see politicians now aligned behind this shared ambition.

All of us know that growth doesn’t happen overnight, and that there is a long journey ahead.

But before we can get going, we have to release the brakes holding us back.

Our recent Employment Trends Survey decisively illustrates one of the most

impactful barriers to growth: labour market shortages.

We found an overwhelming three quarters of respondent firms have been battling shortages throughout the past year. A majority of businesses believe the issue is now a real threat to their labour market competitiveness.

Worryingly, they also think the problem is here to stay – seven in ten thought access to labour would still be a threat in five years’ time.

There are grave implications for the wider economy. 72 per cent of firms said they believe the UK has become a less attractive place for investment over the past five years.

Just under half of those businesses which have faced labour shortages in the past year have been unable to meet output demands. And 36 per cent said they had made changes to reduce the products or services they offer.

This is holding back the growth the Yorkshire & Humber economy hopes to achieve.

So, it’s clear something needs to change. Businesses are aware of their most vulnerable pressure points – and they also know what levers can be pulled to improve access to labour.

To cope with shortages, many firms are focused on attracting and retaining employees.

But this makes it harder to concentrate on the productivity-boosting investments – like training and automation – that really matter in our pursuit of economic growth.

This imbalance is of big concern to the business community.

Our survey found 46 per cent think the Government should introduce incentives to help business make the investments needed to bolster productivity.

But we also need tackle other roadblocks to make sure industry doesn’t just cope – it thrives. That means adopting a more flexible approach to immigration. This will particularly benefit those sectors hit hardest by the frailty of our current labour market. 44 per cent of respondents in our survey think the Government should grant temporary visas for roles in obvious shortage, and many businesses here in Yorkshire agree.

There have been some encouraging signs that the Government is listening, as ministers intend to look at these issues.

But firms can’t wait around for action. As a first step, the Shortage Occupations List should be updated urgently, to enable firms to meet crucial recruitment needs. We also need to reform the Apprenticeship Levy, which has held firms back from investing in skills.

By addressing current labour market shortages, the Government can build solid foundations which enable businesses to reach growth targets and increase prosperity for all – an aspiration firms in our region unequivocally share.

Beckie Hart is Yorkshire & Humber regional director for the CBI.