One of the UK's most powerful business lobby organizations has slammed government suggestions to invest in domestic workers, claiming that doing so will not solve the short-term labor shortages that are increasingly putting retailers and supply chains under strain.

The Institute of Directors (IoD), speaking on behalf of a growing chorus of business organizations, has asked for new, flexible visas that would allow foreign employees to come in to fill critical tasks, particularly as lorry drivers, following an outflow of workers due to Covid and Brexit.

“While UK businesses should invest in the skills and capabilities of their domestic workforce, this is unlikely to be a long-term solution to labor shortages,” said Roger Barker, director of policy at the Institute of Directors. “The government needs to take a more pragmatic approach, which includes a more flexible visa regime that relieves some of the current business pressures.”

A shortage of lorry drivers, exacerbated by the Covid issue and Brexit, has already caused strain on UK supply lines, leaving certain businesses, fast-food chains, and supermarkets unable to replenish their inventory.

The Confederation of British Industry (CBI) reported last week that stock levels in August had dropped to their lowest level since retail industry trends were first tracked nearly four decades ago, while McDonald's ran out of milkshakes and Nando's had to close 50 locations due to shortages that prevented it from serving its most popular peri-peri dish.

Worker shortages in various important manufacturing sectors have been cited for the supply constraint, which has been exacerbated by Covid demands and a lack of international labor owing to Brexit. It has caused companies to raise prices in order to recruit employees, such as Waitrose, which is now reportedly willing to pay £53,780 per year for heavy goods vehicle drivers, eclipsing the incomes of some of its top executives.

To help address the issue, industry organizations such as Logistics UK and the British Retail Consortium have called on the government to give temporary UK visas to EU truck drivers.

However, Kwasi Kwarteng, the business secretary, countered by saying that firms should invest in UK-based employees rather than relying on international labor, especially since domestic workers may be left without financial support after the furlough program ends on September 30.

Kwarteng asked firms to aid the "many UK-based workers [who] now face an uncertain future and need to find new employment opportunities" in a letter to business organizations on Friday.

“I am sure you would agree that leveraging the strength of our domestic workforce is critical and that our migration policies must be considered alongside our strategies to ensure UK-based workers have better access to decent employment opportunities,” Kwarteng continued.

Other industry groups, including the CBI and the Federation of Small Businesses (FSB), are warning that if existing labor shortages are not addressed, the post-Covid rebound could be jeopardized.

“From HGV drivers to hospitality, skilled food manufacturing workers to expert trades in construction, there is no doubt that staff shortages are putting pressure on the post-pandemic recovery,” said Matthew Fell, the CBI's chief policy director.

While the furlough program will help bridge some labor shortfalls, he noted there are “deeper, structural challenges to address,” such as skill shortages.

According to Mike Cherry, the FSB's national chairman, the number of small businesses claiming that skill shortages are holding them back has risen dramatically in recent months. “If we don't address the situation, we risk suffocating our economic recovery before it even gets started,” he continued.

“We need to strike a balance here: we need an immigration system that is accessible to businesses of all sizes, allowing them to access the international talent they need to thrive, as well as renewed efforts to upskill the next generation and reskill existing workers in the UK. “To suggest this is an either/or situation is misleading and unfair – it is not a choice,” he said.

“We need to temporarily attract international HGV drivers while also investing in domestic training – a process that could take months.”