FSB national chair Martin McTague said the latest Office of National Statistics figures revealing the increasing number of people now not in the labour market due to long-term illness mean small firms are still competing for the limited number of workers on the job market.
And without more government action, small firms can’t fill the increasing number of job vacancies.
“It’s concerning to see that the number of those economically inactive due to long-term sickness is at a record-high — this is a stark reminder that more needs to be done to support people with long-term sickness into employment, which is crucial to our economic growth,” Mr McTague said.
“Earlier this year, FSB published a report, Business Without Barriers, which put forward a list of recommendations to close the disability employment gap. They include a ‘Kickstart’-style disability employment scheme to get more disabled people into employment for the first time and a Statutory Sick Pay rebate for small businesses to help with the costs of long-term sickness absence.
“Despite the number of job vacancies falling, we’re still seeing an extremely tight labour market with over 1.2 million unfilled jobs across the country.
“The widespread labour shortage is limiting small firms’ ability to grow, as they also wrestle with a worsening energy crisis in the winter, rising interest rates and rampant inflation.
“What small firms need now is a holistic approach to skills and training. Maintaining Skills Bootcamps in the long term and enabling small businesses to automate processes by continuing to ensure that R&D tax credits can be claimed without needless administrative hurdles should help.
“It’s vital to ensure small firms can access global talent, as they don’t have the same level of resources as big corporates to sponsor overseas workers — limiting visa fees to £1,000 for small employers will help us get there.”
British Chambers of Commerce head of research David Bharier said the latest data confirms that the UK is facing the tightest labour market in years.
“Our own research shows that labour shortages are holding back the ability of many businesses to service existing customers and grow,” he said.
“Despite a further decrease in the number of job vacancies to just under 1.25 million, the overall level remains very high. Businesses are currently facing multiple external shocks, from global supply chain disruption, rampant inflation, and rising interest rates. Labour shortages are yet another issue weighing down on business confidence.
“While the unemployment rate of 3.5 per cent stands at the lowest level since 1974, the increasing economic inactivity rate, now standing at 21.7 per cent, should be a cause for concern, with long-term sickness cited by the ONS as a key driver of this. Average weekly earnings also continue to be outstripped by inflation for workers overall.
“If government is serious about growth, it needs to get serious about jobs. There are key reforms it should adopt to help ease tightness in the labour market. These include supporting greater business investment in workforce training, adopting flexible working practices, expanding the use of apprenticeships, and a comprehensive reform of the Shortage Occupation List to allow sectors facing urgent demand for skills to get what they need.”
