Complaints about staff shortages have been in the news a lot of late. So what is behind the problem?
Staff Shortages
The current crises in relation to staff shortages and hiring has been caused by the convergence of a number of long term and short terms issues. These are as follows:-
- The date for the lifting of Covid-19 restrictions has been very uncertain for many sectors, such as hospitality. Indeed, the lifting of the final stage of lockdown measures had been put back from the 21st June 2021 to the 19th July 2021, and there was no guarantee that they would not be put back again. Hence, many businesses have simply erred on the side of caution and delayed recruiting for reopening until as late as possible. Accordingly, with everybody who is due to reopen competing for new staff at the same time, many have encountered problems in hiring, and have therefore found themselves with staff shortages as a result
- So many businesses have reopened over the last few months, or are about to reopen, that the latest report from the Office for National Statistics (ONS) has found that the number of vacancies is now 9.9% above the pre-pandemic level. That is, there were 77,500 more vacancies during the period April - June 2021, compared with the quarter January - March 2020. In total, there were 862,000 vacancies during the period April - June 2021, an increase of 241,200 (38.8%) compared with the previous quarter
- With the Covid-19 Delta variant causing huge increases in infections across the country, and now running at over 50,000 a day, more and more existing employees are having to take time off work and to self isolate. In fact, across England and Wales, in the week to the 7th July 2021, 530,126 alerts were sent out by the NHS Covid-19 app. This has considerably compounded the overall problem with staff shortages, and highlights that it is not just a problem related to recruitment and skills shortages.
- The problem of staff shortages has been compounded by the fact that the number of oversees workers available to the UK has dropped considerably, due to a combination of the ending of free movement under Brexit, the new points-based immigration rules that apply, and the travel restrictions and job losses created by the Covid-19 pandemic. During the pandemic, around 1.3 million oversees workers left the UK, according to a report by the Economic Statistics Centre of Excellence (ESCOE). The report states: "It seems that much of the burden of job losses during the pandemic has fallen on non-UK workers and that has manifested itself in return migration, rather than unemployment."
- The UK has had a long standing problem with skills shortages, low productivity, and a lack of investment in skills and training, which go back many years. Over the last 2 decades, that problem has been masked by the availability of EU workers under the free movement rules. However, with the ending of free movement, the problems arising out of the lack of investment in skills and training by employers has returned. As Kirstie Donnelly, the Chief Executive Officer at City & Guilds Group, points out: "low productivity and growing skills gaps are plaguing businesses and the wider economy. When compared with our G7 counterparts, the UK’s low levels of productivity see us lagging well behind...The government has recently announced far stricter caps on immigration and told employers that the new points-based system will not allow them to fill job roles as free movement has enabled them to in the past. Clearly investing in training is now even more critical and the stakes are higher."
Investing In Skills And Training
Part of the crises relating to staff shortages is short term in nature, having been caused by the Covid-19 pandemic. These issues will in time be resolved as businesses get up to speed with reopening, and as the world learns to live with the Covid-19 virus, just as it has done with influenza.
Nevertheless, the element of the staff shortages equation that will take far longer to resolve is this country's long standing problem with skills shortages that has been caused by the chronic underfunding and lack of investment in skills and training. The ready availability of workers from the EU to fill the skills gaps this has caused has only served to compound this problem, as it has simply given employers the excuse they needed not to invest. Now that free movement has ended, the problems created by the lack of investment has now returned to haunt penny pinching pound foolish employers with avengence.
Moreover, the problem with skills and staff shortages has been made even worse by Government cuts in training, with the adult skills budget cut by 35% between 2009 and 2015 alone.
Staff Shortages: Focusing On The Long Term
The Confederation of British Industry (CBI) has called for a relaxation of the new points-based immigration rules and an urgent update to the "shortage occupations list". However, the Government needs to balance these calls against the need for British businesses to finally face up to their responsibilities and invest in skills and training. Only by doing that will the problem of skills and staff shortages be resolved on a long term basis.
The Government recently launched a new £2.5 billion National Skills Fund in order to address this country's long term problems with skills and staff shortages. Moreover, The Government has just launched a consultation into "the current offers funded through the National Skills Fund [and].....on meeting critical skills needs." Whilst this represents a starting point in addressing the chronic lack of investment in skills and training, far more needs to be done by employers themselves as well. They themselves need to start investing in their own futures by investing in the skills and training requirements of their own workforces, and should not be just relying upon the taxpayer to do it for them.
