Photographer: Simon Dawson/Bloomberg

U.K. Firms Face Skill Squeeze Before Brexit Negotiations Begin

  • ‘Big question’ for 2017 is how to fill vacancies, REC says
  • Households see stagnant pay growth even as inflation rises

The supply of potential new workers in the U.K. is softening, leaving the labor market on fragile footing before potential restrictions on migration are introduced as the country leaves the European Union.

Availability of both permanent and temporary staff fell in December, the Recruitment and Employment Confederation said in a report Tuesday. Prime Minister Theresa May signaled Sunday that regaining control of immigration and lawmaking are her priorities in the Brexit process, which may mean quitting Europe’s single market.

That could result in recruiters, who are already seeing shortages in accounting, engineering, nursing and other skills, facing even more difficulty in the coming year. The jobless rate is currently at its lowest level in over a decade.

“The big question for 2017 is about how employers will fill vacancies,” REC chief executive Kevin Green said. “There is an urgent need for people to fill roles in catering, care, and food manufacturing -- in these sectors especially employers rely heavily on workers from the EU.”

The impact of rising inflation on wage growth is another key determinant in how the economy will fare in the wake of the referendum. According to the report, starting salaries edged up higher. Going forward, Britons see pay growth remaining stagnant, a trend that’s likely to persist this year as companies face uncertainties over Brexit and rising costs, the REC said.

The Chartered Institute of Personnel and Development said last month that slower growth, lower real wages and increasing precariousness in the workforce will be major challenges for the U.K. government and businesses this year.

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