Future workforce: Labour shortage risks grow

The latest Viewpoint report – Inflation persists as risks grow reveals that labour shortages have moved from a persistent challenge to a system‑wide strategic risk for the food sector. As employers contend with inflation, weak consumer sentiment, and regulatory uncertainty, tightening labour supply is amplifying pressures across the value chain and constraining growth.

What’s happening?

The UK labour market has been tight for several years, but current evidence shows shortages are becoming structural, affecting nearly every stage of the food system. Employers face a widening gap between worker demand and supply, driven by falling participation rates and a sharp rise in long‑term sickness.

At the same time, geopolitical uncertainty and subdued trading conditions are making workforce planning increasingly difficult. Businesses are contending with labour scarcity, wage pressure, and the need for greater productivity, often simultaneously. These dynamics are now firmly embedded in the risk landscape for 2026.

What the data says

Labour shortages are no longer limited to specific hard‑to‑fill roles. They now affect:

• logistics and warehousing

• food manufacturing and processing

• retail operations

• technical and specialist roles, including engineering and food technology

This broadening shortage reduces operational flexibility at exactly the moment businesses must be quick to respond to economic volatility.

The rise in long‑term illness is now one of the clearest structural drivers of weakness in the labour supply.

3.0 million people are economically inactive due to long‑term sickness compared with 1.8 million unemployed.

This gap between inactivity and unemployment signals the need for targeted, long‑term interventions before labour capacity can stabilise.

A tight labour market also reinforces cost pressures. Wage competition creates longer‑lasting inflationary effects, especially in skill‑short areas, further squeezing already narrow industry margins.

Why this matters

Labour shortages create compound risks across the food sector:

• Operational disruption - gaps in staffing slow production, extend lead times and increase the likelihood of bottlenecks.

• Higher costs - wage inflation driven by scarcity pushes up operating costs, especially for frontline and specialist roles.

• Reduced productivity - insufficient staffing limits innovation, service levels, and continuous improvement.

• Supply chain fragility - shortages ripple across procurement, manufacturing and distribution, increasing volatility and reducing resilience.

Together, these factors make businesses more vulnerable in an environment that also demands agility, efficiency, and responsiveness.

A strategic risk - not a short‑term issue

Labour shortages must now be treated as a long‑term structural risk, intersecting with inflation, supply chain resilience, and the sector’s broader growth prospects. Without action to strengthen talent pipelines and improve workforce participation, the food system will continue to face constraints that no amount of tactical activity can fully offset.

Looking ahead: addressing the labour force gap

Building a resilient future workforce will require sector‑wide collaboration. In 2026, IGD will support employers through future workforce planning - helping businesses strengthen talent pipelines, widen recruitment channels, and improve sector attractiveness.

Re‑engineering supply chains to be more resilient will require reshaping the workforce, building new capabilities, and designing roles that attract and retain the skills the sector needs.

Addressing these challenges will not be easy against a backdrop of weak trading conditions. But activities focused on people offer some of the highest returns - strengthening resilience today while laying foundations for long‑term productivity and growth.

Understand how IGD is supporting employers to build a future-fit workforce.