Alarm at white collar skills shortage

There is a dire shortage of professionals such as lawyers and accountants, according to the latest survey adding concerns over the tightness of the labour market.

There is a dire shortage of professionals such as lawyers and accountants, according to the latest survey adding concerns over the tightness of the labour market.

Concern about skills shortages at firms in the business and professional services sector hit its highest level for two years last month, the Confederation of British Industry says.

The survey is published today, as a separate report shows the recent inflation rise had led to an increase in the average pay settlement.

The CBI said its poll of almost 300 firms found a shortage of labour, including managerial staff, rose sharply last month. On balance, 33 per cent of firms said the shortage would discourage them from investing in their businesses - the highest since the survey began in 1998.

Almost half the firms, 46 per cent, said the lack of qualified staff would harm their ability to expand. This was the highest level other than in the immediate run-up to the eve of the millennium. The findings will add to economists' concerns over inflationary pressures in the labour market. A shortage of skilled workers means companies have to pay more to recruit and retain staff.

Official figures show a record number of people are in work while the number out of work and claiming benefit is at a 25-year low. Despite this, there has been a slowdown in the growth of pay and bonuses.

Kate Barker, the CBI's chief economist, said: "We do have much clearer signs of skills shortages but we are not seeing it feed through into wages." She said intense competitive pressures meant firms were unable to pass on rising costs to their customers, and instead had to absorb them into their profit margins.

The survey showed business and professional services firms - accountants, advertisers, IT firms, lawyers and market researchers - believed the prices they could charge would fall over the next three months.

At the same time, the number of firms planning to increase spending on training rose sharply. The survey also covered consumer services firms such as bars, restaurants and travel agencies.

Profitability fell for both sectors although both were optimistic that the outlook would improve over the autumn.

Meanwhile, analysts Incomes Data Services said pay deals increased over the past year. Settlements rose steadily with deals of 3-4 per cent awarded in recent weeks.

IDS said the pattern of settlements followed the rise in inflation from 1 per cent last autumn to more than 3 per cent.