LUTON, England (AP) _ With Britain's economy on the upswing, a new phenomenon has emerged: Employers can't find workers to fill many jobs.

The buoyant economy is creating new jobs very quickly, and they require new skills. Hence, Britain has 2.5 million people unemployed, but 700,000 job vacancies.

''It totally amazes most people because they're constantly bombarded with articles about unemployment,'' said Bill Horsman, managing director of 98- year-old hatmakers W. Wright and Son Ltd. in Luton, a town that suffers from this problem.

The Trades Union Congress, Britain's umbrella labor organization, blames industry for failing to train workers.

Employers acknowledge that companies haven't trained or retrained enough workers, but they also maintain that Britain's schools have failed to equip students with proper skills.

The schools counter that while this was true in the past, they are more responsive today.

Adding to the problem are the economic disparities among Britain's various regions, which discourage job seekers from relocating because living in one place, mainly the Southeast, can cost so much more than in another.

At the same time, school graduates, whose numbers are shrinking because of lower birth rates, shy away from the ''sweat-shop'' work, such as in Luton's hat industry, and ''oily, dirty'' engineering that in a country like West Germany is a high-status profession, said Brian Sykes, manager of an employers' self-help group called the Bedfordshire Network.

While unemployment stood at 9 percent in March, the number of unfilled jobs was up 15 percent from a year ago, according to the Department of Employment.

Luton, a city of 150,000 people 28 miles northwest of London, had 1,199 vacancies and 7,641 unemployed people, or an estimated 8 percent of the work force.

''You have this peculiar situation where you have a relatively high unemployment rate, which coexists with quite a large number of unfilled jobs, partly because of the skills shortage,'' said Sykes.

For Horsman, the hatmaker, it means: ''You can't take on new business because you can't fulfill the orders.''

The traditional industries are vulnerable because they are having trouble replacing their aging work forces.

The shortage not only makes companies less productive, but also forces them to pay more to attract employees. That cuts into profits and can fuel inflation.

Luton also is more expensive to live in because its proximity to London pushes up house prices, discouraging people from other, the less expensive areas to move here.

But things are looking up.

Local schools are teaching skills the job markets need. Commercial training companies also have stepped in to fill the gap and profit from it.

The Conservative government's Manpower Services Commission has launched various plans under which it and employers jointly pay employees during training.

The Trades Union Congress has called for the government to require employers to train workers and pay for it.

Separately, employers have set up 80 networks around the country to identify the shortages, and start training programs.

In the meantime, individual companies have taken other steps.

Horsman, for example, has bought stitching machines and uses glue guns to cut down on the number of seamstresses he needs. He also uses 10 outside workers, mostly young women with children, who trim hats at home.

A year ago, he built a new $1.32-million factory.

''If you can't attract people to a factory like this, you might as well give up,'' Horsman said.

But he still hasn't been able to find the six to 10 extra workers needs to boost his $3 million annual production by 20 percent.

End Adv Wednesday PMs May 25