The shortage of drivers has been a significant issue in the UK labour market for a number of years now, but with the implementation of Driver CPC looming, it looks set to come to a head over the course of 2013/14.
Just how bad is this skills shortage though? Statistics recently obtained via a Freedom of Information request to the DVLA show that C and C+E test passes have declined dramatically year on year across all age groups since 2005, save for a slight rise in 2011. New entrants to the driving workforce have dropped from a high of 48,227 in 2005 to just over 25,000 in 2012. This near 50% drop off in new professional drivers is reflected in the REC/KPMG Report on Jobs which has seen REC members report a shortage of drivers nearly every month for the past two years.
Furthermore, the existing driving workforce is also noticeably aging: 65% of current C and C+E license holders in the UK are over 40, 24% are in their 30s and just 11% in their 20s. There are nearly as many over 60 year olds there are under 30 year olds – unheard of in any other sector of the UK economy.
In the past, recruiters have plugged the gap in the UK driving workforce by sourcing competent, compliant drivers from other EU nations due to the historically higher wages offered in the UK. However, wages have been stagnant for nearly five years, with average hourly rates hovering around £8.50, up only 20p from the 2006 average of £8.30 – a 2.4% increase over a period where inflation has at times topped 5% and rarely dipped under 3%.
Overtime rates have also declined, and whereas an agency driver in 2005/6 could expect a higher weekend rate and a premium once they topped 40 hours a week, increasing numbers of end-users are now offering a slightly higher basic salary with a seven-day flat rate and no overtime option at all.
Add to that the cost of entry – a 21 year-old hoping to become a LGV driver needs to find over £2,000 to qualify before they can drive their first shift. There is the initial driving test, up to £800 for a C license training course, the same or more for the C+E license, £35 for a tachograph card and another £250 for Driver CPC tests. It’s little wonder that the industry is struggling to attract new entrants to the sector.
Then there is the issue of driver’s negligence insurance (DNI). This is a real issue for agencies as it increases costs and reduces margins. It also impacts on younger drivers who must hold their license for 2 years and complete 180 driving hours to get DNI cover. This can be a major barrier for newer drivers when end users insist on DNI – many find themselves unable to work unless their agency is able to self-insure.
The net result is that even the top recruiters in the UK are struggling to meet growing client demand and this problem will only be exacerbated when Driver CPC comes into force this year for bus and coach drivers and 2014 for lorry drivers. Even with the ‘acquired rights’ route to qualification, REC members tell me that many of their over-50 drivers (who make up 31% of the workforce) do not intend to complete their Driver CPC training and will simply drop out of the workforce when it kicks in.
Any significant spike in demand over the next two years will expose the dramatic shortage of drivers in the UK. When that happens, the only way end-users will be able to source sufficient drivers will be through sudden and significant hikes in the rate they are paying. End-users of agency drivers should therefore work closely with their recruitment and insurance partners now to mitigate such risks, by gradually tapering up wages for CPC-qualified drivers, splitting or subsidising the cost of CPC training with their agency suppliers and dialling back their reliance on DNI to help get more young people into the sector.