UK Immigration Cap will hinder economic recovery.

Skills shortages, immigration restrictions and employment laws are likely to seriously hinder employer efforts to fill newly created private-sector jobs next year, a survey has revealed.

Research from PricewaterhouseCoopers (PwC) found that 28 per cent of UK companies plan to increase employee numbers in 2011.

This is more than double the number of businesses that had planned to create new jobs in 2010, which was just 13 per cent. However, of the firms planning new positions next year, only 15 per cent said the increases would be “significant”.

Michael Rendell, head of HR services at PwC, said that employers faced serious challenges in finding the right people for the new jobs.

Skills shortages are predicted to be the main problem, with 53 per cent of British respondents ranking it as their biggest challenge.

But UK respondents also ranked immigration restrictions on global mobility and employment laws as major challenges when filling new roles (34 per cent and 23 per cent respectively).

Rendell said: “The UK has lost its position as the world’s most educated workforce, which is particularly worrying as we come out of the recession and may limit future growth.”

He advised firms to “take a more systematic approach to learning and development”.

Rendell said: “Ensuring staff can be easily deployed internationally is ever more important for businesses extending their global reach, but UK firms have been particularly challenged by the immigration cap.”

He said that while the government has proposed to remove the limit on intra-company transfers for those earning more than £40,000, people earning between £24,000 and £40,000 will be restricted to a one-year stay.

“It does not make economic sense for businesses to bring people into the UK for less than two years so this limit poses a serious threat to the flexibility of the UK’s labour market,” he said.

UK firms view employment laws as less of an issue when recruiting for new posts than employers in America, where 50 per cent of respondents in the worldwide study flagged it as their main concern. However, Rendell warned that there is a “risk” for UK firms if more employment laws are brought in.

“With financial services in particular being hit with a raft of regulation, Britain’s ability to compete with markets where there is less of a compliance burden could be reduced.”

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