By Lauren Howells.

Companies who are planning to employ more staff are being hit by worsening skills and labour shortages, partly due to a “sudden reversal” in the growth in the number of both non-EU and EU migrants in employment in the UK, research by the CIPD has revealed.

The professional HR body has said that its latest report, based on a survey of 1,002 employers, shows that while the short-term outlook for employment remains strong, labour and skills shortages are accelerating. The research also found that although the “tightening labour market” was fuelling an increase in wages for key staff and new starters, pay rises were “stuck in the middle lane” for most workers.

Filling vacancies had become more difficult

Out of the employers questioned that currently had vacancies to fill, 70% said that at least some of their vacancies were proving hard to fill, compared to 66% in summer 2018 and 61% in spring 2018.  Moreover, 44% of all employers reported that filling vacancies had become more difficult over the past year.

The problem has been “exacerbated” by a “relatively significant drop” in the number of both EU and non-EU migrants that are working in the UK, the CIPD has said.

The latest official data reveals that the number of non-UK-born workers in the UK decreased by 58,000 between the second quarter in 2017 and the same period in 2018. Out of these workers, 40,000 were migrants from outside the EU.

Between the same quarters in 2016 and 2017, there was an increase of 263,000.

Labour supply looks set to be “further constrained” from 2021

Employer plans to recruit hit by “worsening skills and labour shortages”

From 2021, the CIPD expects the labour supply to be “further constrained” when migration restrictions for EU citizens are introduced, especially for lower-skilled workers.

It warned that employers were concerned that the main route for recruiting EU citizens to fill lower-skilled roles that were proposed recently by the Migration Advisory Committee would not be enough to satisfy their recruitment needs.

It also added that the report had found that a third of employers who employ workers from outside of the EU says that the administrative burden of using the current points-based system is too great. From 2021, this system could be used for EU citizens as well.

“The data implies that the pendulum has swung away from the UK as an attractive place to live and work for non-UK born citizens, especially non-EU citizens, during a period of strong employment growth and low unemployment,” Gerwyn Davies, Senior Labour Market Analyst for the CIPD said.

“This has heightened recruitment difficulties for some employers. It also underlines the risk that more non-UK-born citizens and employers will be discouraged from using the post-Brexit system if more support is not provided and it is not made simpler, fairer and more affordable; especially for lower-skilled roles.”

He warned that failure to do this would heighten recruitment difficulties, which could result in “negative consequences for existing staff, such as higher workloads, and loss of business or orders for firms”.