Recruitment problems are at record levels as three out of four companies struggle to hire staff, according to the British Chambers of Commerce.
The BCC said roughly 61% of firms were looking for staff in the second quarter, similar to 60% in the first quarter. But 76% were reporting difficulties.
Some 5,700 businesses were surveyed to find that the construction sector is facing the biggest challenge, followed by the production, manufacturing, and hospitality industries.
BCC head of policy Jane Gratton said: “Businesses remain under huge pressure to fill jobs, but record levels of recruitment difficulty are showing no signs of improvement.
“Solutions are urgently needed so that firms can keep their doors open throughout these tough times.
“We have written to the government outlining a three-point plan on how they can work with businesses to solve this.
“Firms must be encouraged to find new ways of unlocking pools of talent – by investing more in training their workforce, adopting more flexible working practices, and expanding use of apprenticeships.”
The survey found that fewer than one in three firms increased investment in the past three months.
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Ms Gratton said: “There are 1.3 million unfilled jobs in our economy and now fewer people in the workforce than before the pandemic.
“This is holding back productivity and growth, and employers are at their wits’ end.
“It is putting livelihoods at risk and damaging the economy.
“Employers cannot wait for a new prime minister before this is sorted. Shortages are impacting not only on their ability to service order books but also on the morale and wellbeing of their people.
“The economic challenge we are facing is huge and unless we start to fill the hole caused by 1.3 million vacancies, we cannot get back to growth.”
The news comes a day after the Confederation of British Industry’s CEO Tony Danker wrote an open letter to the Tory leadership hopefuls calling for the prioritisation of economic growth.