Vacancies are going unfilled

The same proportion of companies told the CBI that they trained their staff to levels above that needed for their current jobs, but this evidently was not enough.

According to John Cridland, the CBI's director of human resources, this is an indication that the labour market is beginning to overheat.

In November 1997 the government told a CBI conference it would set up a task force to devise ways of tackling skills shortages.

Temporary workers fill the gaps

Almost half of the 670 firms contacted said that they had increased their use of temporary staff and over a quarter intended to do the same in the next year.

According to Jonty Bloom, the BBC's industry correspondent, this increase is, at least in part, an attempt by companies to make up for their lack of skilled staff.

As a result, ironically, skills shortages have gone hand in hand with an increase in feelings of job insecurity among a third of employees.

"It is increasingly difficult to provide people with jobs for life," said CBI director-general Adair Turner.

More than 60% of firms said they were paying staff based on their skills and their competency.

The CBI noted, however, that managers were more likely to have their salaries negotiated individually, while clerical and manual workers tend to have theirs agreed at a company-wide level.