UK firms take desperate measures to tackle staff shortage

British businesses are taking creative and unusual steps to attract staff, amid a notably tight labour market.

One of celebrity chef Raymond Blanc's restaurants is subsidising a bus service. Le Manoir aux Quat'Saisons, which holds two Michelin stars, contributes to the transport link, helping them reach workers who live several miles away in Oxford.

Supermarket chain J Sainsbury is giving its temporary Christmas staff free food during their shifts for the first time. The Giggling Squid chain of Thai restaurants is offering free accommodation and utility bills for new chefs across England.

The five-star Cliveden Hotel in Berkshire has sign-on bonuses as high as £2,000 (S$3,200) for kitchen staff. Pub owners are becoming landlords in another sense - by buying properties for their staff to live in, said the British Beer and Pub Association.

The UK is suffering from a bout of apparent economic contradictions. It is heading for the longest recession since records began, the Bank of England (BOE) warned last week, while simultaneously squeezing monetary policy at the sharpest rate for 33 years.

The BOE cited the country's tight labour market as it lifted interest rates by 75 basis points, but also said that half a million jobs are at risk from the economic downturn. Britain is faced with the worst of both worlds.

On the ground, many businesses say they would like to expand and contribute to higher gross domestic product (GDP) - if only they could get the staff. 

"There are sectors that could grow rapidly now but are being constrained" by staff shortages, said Alexandra Hall-Chen, senior policy adviser at the Institute of Directors. "That constrained growth is worrying us."

Simon Wolfson, the boss of Next, has urged the government to allow more immigration. "We have got people queuing up to come to this country to pick crops that are rotting in fields, to work in warehouses that otherwise wouldn't be operable, and we're not letting them in," he told the BBC.

Three-quarters of British businesses have been affected in the past year, said the Confederation of British Industry, and nearly half of those said that the tight labour market has stopped them from fulfilling orders. 

London pressure

The problem is particularly intense in the capital. London has markedly worse staffing gaps in its health services, with a rate of full-time vacancies at 10.9 per cent compared to an England average of 7.9 per cent, said the Nuffield Trust. The supply of skilled construction workers in London is so low that some builders ask clients to wait as long as 26 months to break ground on an extension, said Gary Olsen, director of Create, a building company in south London.

Workers seem to be less eager to come to London. Employment website Indeed said that searches from people outside the capital looking for jobs in London is down by over a third from 2019. A major reason is the cost of housing - up 18 per cent year-on-year said flatmate-finding service SpareRoom. Its data showed that in the South Kensington area of London, it now costs an average of £1,400 a month to rent just one room in a shared property.

"Sharply rising rents in London and a severe shortage of available properties may have made some jobseekers think twice about moving to the capital," said Jack Kennedy, UK economist at Indeed. He added that this could be particularly true for lower-wage workers whose salaries cannot keep pace with the rapid rise in the cost of living in London. The scale of the openings can be huge - last month Heathrow Airport said it needs to hire 25,000 workers.

Worst sectors

Lower-skilled or manual labour is also proving hard to find, with 217,000 vacancies in the health and social work sector - the most of any industry, and more than a sixth of total UK vacancies - figures from the Office for National Statistics showed. Hospitality, including restaurants and hotels, is one of the next-worst affected sectors, with 158,000 open jobs. 

The lack of staff can prevent businesses from growing. Vicky Saynor, who runs a holiday cottage business with her husband in Hertfordshire, said that a lack of cleaners has stunted their expansion plans. Instead of focusing on the marketing and managing of the business, the pair each spend five hours a day cleaning. "We had big plans of franchising," she said. "The whole growth of our business has been massively affected."

She said the problem became acute after the pandemic. British workers wanted to spend less time working, while overseas staff went home, either out of choice or from difficulties with the post-Brexit immigration system.

Business groups have been calling for greater levels of immigration. However, Prime Minister Rishi Sunak's new government brought back Suella Braverman as home secretary last month, a move that was seen as an attempt to appease the right of the Conservative party. Braverman typically takes a hard line on migration.

Little more than a year has passed since then-prime minister Boris Johnson told the Tory party conference that he would create a "high wage, high skill" economy. Instead, real wages are falling and businesses are finding it increasingly difficult to secure the skills they need. Bloomberg

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