The latest JobsOutlook survey from the Recruitment and Employment Confederation (REC) has found that 51 per cent of Britain’s employers expect to confront skills shortages for permanent staff.

The monthly survey, which is produced by the REC in partnership with research consultancy ComRes, draws on telephone interviews with 600 UK employers. The latest report covers the period of 11th March – 25th May 2016 and finds that 30 per cent of the organisations polled are operating at full capacity. Half have only “a little” capacity available to handle any rise in demand.

While last week’s official figures showed that employment levels in the UK have hit a record high (74.2 per cent), another pressing issue was hidden in the data: skills shortages. This is precisely what the REC JobsOutlook report has drawn attention to, forecasting on the basis of employer responses that candidate availability is set to diminish further.

Sixty-eight per cent of survey respondents said that they intend to maintain current permanent headcounts, but only 20 per cent anticipate hiring more permanent staff in the coming three months. They also highlighted their concerns about dwindling candidate availability for both permanent and temporary/contracting roles in key sectors such as technology, engineering, health and social care and hospitality.

Commenting on the findings, REC Chief Executive Kevin Green immediately drew attention to the effects of the EU referendum, as the uncertainty surrounding which is “making a difficult situation worse” in a context where the UK labour market is already at a tipping point.

Hiring, he noted, had already slowed in recent months as a result of both Brexit uncertainties and concerns about the wider global economy. Even so, employers are telling the REC in clear terms that they are struggling to find permanent and temporary/contracting candidates to fill vacancies.

Green predicted that a “Leave” vote may in fact discharge pent-up pressure and generate a small hiring boom in the second half of 2016, but there are also drawbacks. Green continued:

“On the other hand, a vote to leave is likely to see employers abandoning projects, shelving new expenditure and implementing hiring freezes during a prolonged period of uncertainty. We also have major concerns about the impact Brexit would have on lower-paid sectors which rely heavily on workers from the EU, such as hospitality, healthcare and farming. It is difficult to see how an Australian points-based immigration system would meet the needs of businesses in these sectors when British applicants are already in short supply.”

Green also noted that the rhetoric calling for low-skilled EU migration to be curbed omitted a viable explanation of how employers and public services would cope with the shortfall in candidates if free movement was abolished.

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