Skills Shortages
New research compiled by the Recruitment and Employment Confederation (REC) involving interviews with 167 employers has found that whilst the recuitment market cooled over 2023, UK employers are still encountering skills shortages in terms of being able to hire workers with the right skills set.
REC Report
Small firms with less than 50 employees are experiencing the most severe problems with skills shortages according to the REC report, with 81.5% encountering problems. However, larger firms have also experienced problems with skills shortages as well, with 57.1% of medium sized firms (those with 50 - 249 employees) finding its difficult to recruit workers with the right skills set, and 66.7% of large firms (those with 250 or more employees).
The report concluded that an increase of 10% in demand, given the current skills shortages within the lobour market, could cost the UK economy 1.2% in terms of lost GDP growth and productivity by 2027 (up to £39 billion every year).
As we highlighted in a previous article, the UK has a longstanding problem with low productivity and the lack of investment in skills and training dates back many years. Over the last two decades, that problem has been masked by the availability of EU workers under the free movement rules. However, with the end of free movement due to Brexit, employers again face issues arising out of low productivity and the need for more investment in skills and training. Moreover, the problem has been aggravated further by the large numbers of over 50’s retiring early during the COVID-19 pandemic.
Commenting upon the findings of the new report, the Chief Executive of the REC, Neil Carberry stated: "Companies reporting persistent hiring difficulties comes as no surprise....Too few firms have appreciated that – despite slow growth – our jobs market has changed fundamentally.....For too long, the debate within businesses and with governments about productivity, production design and workforce development has been sterile. That has to change if the economy is to reach its full potential and boost prosperity, public services and incomes."
Other Research
Another survey, the Employer Skills Survey 2022 involving 72,918 respondents and published last September, found that between 2017 - 2022 the number of firms that had a vacancy due to skills shortages increased from 6% to 10%.
However, the most disappointing finding from the Employer Skills Survey 2022 was that despite the increasing problems with skills shortages within the economy, the amount that UK businesses actually spent on training that would address the issue not only fell during the previous 12 months, but fell 7.7% as a whole in real terms during the period 2017 - 2022. Furthermore, the number of employers who provide their own training fell during that same period from 66% to just 60%.
Ironically, the survey also found that one of the sectors most hardest hit by the continuing problem with skills shortages is the education sector itself
Cost Of Living: Detrimental Impact On Workplace Performance
New research just published by Nous.co, which involved 500 respondents, has found that 74% of employers report that the cost of living crisis has had a detrimental impact upon their employees work performance, with 34% stating that the drop in performance was so severe that productivity had fallen.
Commenting upon the findings, the co-founder at Nous, Greg Marsh, stated: "The cost of living crisis is far from over. Your employees are grappling with a tumultuous mortgage market and ever-increasing bills. This is going to be playing on their minds and their wallets, and we now know it is affecting their work. The companies that manage this crisis best will be those that embrace the cost of living reality and take steps to improve employees’ financial wellbeing."
Marsh adds that: "This includes helping teams manage “life admin” effectively. Any employer who thinks their employees aren’t doing life admin on company time is burying their head in the sand. Some of that is inevitable."
