Tesco – Tolga Akmen/AFP
Shops are at risk of being left with empty shelves in the run-up to Christmas as recruiters warned that the labour crisis gripping the economy is set to continue until next year.
Lorry drivers are in particularly short supply, causing stock shortages across the construction and hospitality industries, while food manufacturers, pubs and restaurants are also struggling to find staff, according to the Recruitment and Employment Confederation (REC).
Neil Carberry, its chief executive, warned that the labour shortage may also cause delays to online orders and force retailers to increase delivery costs.
He said: “There is a real focus now on how to make sure everyone gets what they need for Christmas. We regard this week, the third week of August, as the week we begin to ramp up for the peak across these sectors.”
It came as Britain’s biggest retailers warned that stock levels have fallen to a record low amid a drop in imports and the jobs crisis.
Meanwhile, McDonald’s said it had been forced to remove milkshakes and bottled drinks from its menu due to supply chain upheaval.
The REC warned that a lack of workers could spill over into next year, as those workers who are available are often in the wrong locations or have the wrong skills. Furloughed hospitality workers face a lack of demand in London even as there are shortages in tourist hotspots such as Cornwall.
Mr Carberry said: “Even with a large number of people coming off furlough in August and September, it’s likely that high demand for workers will continue to cause shortages through the autumn."
He added that the labour market could face pressures for the next decade as the baby boomer generation retires and Brexit limits migration which employers have relied on to fill vacancies in recent years.
Last month, Tesco said it would offer lorry drivers a £1,000 joining bonus in an effort to combat the shortage.
However the British Meat Processors’ Association warned this risks simply poaching drivers from other parts of the supply chain, adding that a shortage of Christmas products such as pigs in blankets “now looks inevitable”.
Separately on Tuesday, a survey of retailers published by the Confederation of British Industry (CBI) revealed that stock levels in August plunged to the lowest level since 1983, while retail prices rose at the fastest pace since November 2017.
Alpesh Paleja, an economist at the CBI, said: “There are signs of operational challenges still biting, with stock levels reaching another record low and import penetration falling. Disruption is being exacerbated by continued labour shortages, with many retailers reliant on younger employees currently awaiting their jab.”
The problems are so widespread that HSBC has cut its GDP growth forecast for this year to 6.7pc, down from 7.1pc previously, following May’s weak growth numbers.
The Harbour Inn – Jay Williams
Liz Martins, an economist at HSBC, said: “The rain, pingdemic and other supply shortages appear to have put the brakes on growth.”
The Construction Products Association warned that shortages of timber, metals, electrics and paints could continue into 2022 as demand continued to affect supply.
Noble Francis, the association's economics director, said small sub-contractors and specialist contractors were the worst hit: "Large contractors and house builders have certainty of demand over the next 12-18 months and so can plan and buy in advance so they are less affected. "
Global shortages of commodities is pushing up the price of industrial metals, while forecasters said a crippling microchip shortage that has hit production of cars, consumer electronics and industrial machines in recent months will go on longer than expected.
UBS said the shortage was expected to last “well into 2022”, pointing at Covid-19 outbreaks in Malaysia, a major hub for chip packaging and testing, which has forced some carmakers to suspend production.
UBS said supply problems for carmakers should ease in the coming months as chipmakers allocate more capacity to the sector.
However, analysts said this would be likely to come at the expense of manufacturers who make industrial robots and other machinery used in factories.
The bank said manufacturers were likely to stockpile chips in future to prevent a repeat the next time supply is affected.
Additional reporting: Ben Gartside