Third of businesses planning pay rises

Three quarters of businesses impacted by staff shortages over the past year, with nearly half saying they can't meet customer demand as a result, according to CBI survey

One third of businesses are planning pay rises to match or exceed inflation as companies battle labour shortages.

Three quarters of businesses have been impacted by labour shortages over the past year, with nearly half of those reporting they cannot meet demand from customers as a result, according to a survey conducted by the Confederation of British Industry (CBI) and recruiter Pertemps.

The lack of staff is “having a material impact” on many businesses’ trading as well as growth ambitions.

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As well as limiting company output, 36 per cent of businesses impacted by labour shortages had made changes to or reduced the products or services they offer, while 26 per cent reduced planned capital investment.

More than a third of companies have offered one-off bonuses instead of pay rises, while almost half have brought forward pay reviews or had multiple pay rises over the past year.

Matthew Percival, a director at the CBI, said companies spending heavily on staff leaves them with less to spend on other parts of their operations.

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He said: “Businesses are pulling every lever they can to attract and retain employees, but this is making productivity boosting investments like training and automation harder.

“To go for growth and build a higher-wage economy we will need to ease shortages to create the conditions for higher investment. That means helping more British workers to overcome barriers into the workplace, like a lack of affordable childcare, and taking a pragmatic approach to immigration.”

Percival said “urgently updating the Shortage Occupations List should be the starting point”.

Forty-four per cent of respondents want to see temporary visas granted for roles where there are acute shortages.

The shortage of staff makes the UK a less attractive place to do business, according to almost three quarters of those surveyed, in a threat to the Government’s plan to achieve growth of 2.5 per cent — back to where it was before the financial crisis of 2008.

Many businesses believe that the impact will continue to be felt, with 70 per cent of those surveyed saying access to labour would still be a threat to competitiveness in five years’ time.

Almost half of those companies surveyed want the Government to launch incentives to help them invest in technology and automation to boost productivity.

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...

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