Businesses urgently need more staff but uncertainty over the general election is holding them back from hiring, recruiters have warned.
Three quarters of employers have little or no room to grow at all without hiring more staff, according to the Recruitment and Employment Confederation, a share which rises to 84pc among those with more than 250 workers.
With unemployment very low, businesses have to pay more to get the staff they need: seven in 10 said they had increased salaries and wages in the past year, up from 57pc a year earlier.
But at the same time they are worried about the economy, given the degree of political uncertainty.
Just over half think economic conditions are worsening while fewer than one in five think they are improving – the worst overall balance since the REC started its survey in 2016.
Political certainty is important, as is rejecting plans to make the jobs market less flexible, according to Neil Carberry, the REC’s chief executive.
“This month’s figures show that there is a great deal of potential in Britain’s businesses, just waiting to be unleashed. With so many firms at or close to full capacity, it’s no surprise that employers want to invest in their workforces,” he said.
“But it is uncertainty that is holding firms back. An incoming government should prioritise work by ensuring the two-way flexibility of the labour market is protected, allowing employers to recruit the staff they need while also protecting workers.”
He said a temporary two year work visa would help, as would delays to tax changes for contractors.
Labour has promised “the biggest extension of workers’ rights in history” with extra powers for unions, collective pay bargaining and a ban on zero-hours contracts, which some workers and employers favour for their flexibility.
Meanwhile the Conservative manifesto proposes an Australian points-style migration system, tougher crackdowns on breaches of employment law, and a right to request more predictable hours.
It came as the National Institute for Economic and Social Research warned that rapid hikes to the minimum wage could hit employment.
Andrew Aitken, an economist at NIESR, said: “If the minimum wage is increased too quickly it could harm jobs, particularly for part-time workers, younger workers or those in specific regions and occupations.”
Labour wants a minimum rate of £10 per hour for all workers aged over 16. The Conservatives promise an increase to two thirds of the average wage by 2024, with the age threshold for the main rate cut from 25 years to 21.
Johnny Runge, Mr Aiken’s co-author, said: “We are concerned about the politicisation of the minimum wage, and how this election has quickly turned into a bidding war over which political party can offer the highest minimum wage rates.
“The minimum wage has been a great policy success story over the last two decades, in part because of the close partnership and consensus across experts, employers, workers and political parties.
“This could be quickly undermined if political leaders alone take control of the future path of the minimum wage.”