One in five employers are struggling to fill job vacancies, according to a survey revealing the scale of Britain’s workforce crisis.
New figures from the Chartered Institute of Personnel Development (CIPD) show that 21pc of firms expect to encounter significant hiring issues over the next six months, while one in 10 said they plan to reduce headcount.
The former marks an improvement on the 29pc recorded last quarter, although the labour market remains at its weakest point since August 2013.
Fewer employers are adopting wage rises to fill vacancies, the report stated, and are instead planning to cut staff or recruit less.
The National Institute of Economic and Social Research warned last week that businesses have become “frustrated” with British workers.
The number of firms registering to become sponsors to hire abroad has doubled since 2022, as more than nine million people of working age have dropped out of the jobs market.
More than five million are now on out-of-work benefits, according to the Office for National Statistics, up from 3.5 million in 2015.
Jon Boys, an economist for the CIPD, said: “This feels like a key moment in the UK labour market.
“Employer attention is shifting from helping staff weather the cost-of-living crisis to focus on business sustainability and growth, which will impact headcount in some places.”
He said that in the age of working from home, professions such as teaching and nursing may be less attractive.
The survey also revealed that basic pay expectations for the next year have fallen for the first time since the beginning of the pandemic, from 5pc to 4pc.
It came as the BDO Employment Index showed that Britain’s labour market was at its weakest for more than a decade, giving it a ranking of 98.77.
Projections from the Centre for Economic and Business Research show the unemployment rate climbing in the coming months, hitting 4.6pc in the second quarter of the year.
The Bank of England said earlier this month that Britain’s workforce will be “permanently smaller” as a result of the pandemic, citing “increasing detachment” from workers.
A greater number of baby boomers reaching retirement age means that the number of Britons in the workforce was already “trending down”, the Bank said.
David Miles, a leading economist at the OBR, said last week that the Prime Minister should slash the benefits bill and get more people working to reduce Britain’s debts, rather than relying on immigration.
The Imperial College professor said it was “much less clear that persistently high levels of net immigration to boost the labour force can generate sustained fiscal improvements”.