How recruiters can bridge the shortfall in labour and skills

Many developed economies around the world are facing widespread shortages of labour and skills as they reopen for business. A case in point is the UK, which is experiencing a perfect storm. While 15 out of 18 sectors are reporting record vacancy levels, according to the Office for National Statistics, a decrease in the supply of labour is causing problems across the economy. The Resolution Foundation and the Centre for Economic Performance at the London School of Economics recently published a study on the impact that Covid-19 has had on the labour market. Their Begin Again? research report reveals that the number of people in the UK who are economically inactive – that is, neither working nor seeking work – has increased by 586,000 since the start of the Covid crisis. This growth has been particularly marked among people aged between 55 and 64. That bucks a decade-long pre-pandemic trend in which over-50s accounted for 88% of the growth in the overall size of the labour market. Men aged 25 to 34 constitute another group to have become significantly less economically active. The loss of EU workers is also being felt, reports Gerwyn Davies, senior adviser on labour market policy at the Chartered Institute of Personnel and Development (CIPD). While Brexit had already deterred many of them from working in the UK, EU-wide migration restrictions prompted by the pandemic have likewise taken their toll. This situation has had a particularly serious impact on low-paid sectors such as food processing and social care, which the UK’s domestic workforce tends to view as unattractive. “It feels as though the shortfall is much higher than it is, as the number of older and EU workers rose sharply over the decade to 2020 in line with an increase in employment, so that supply met demand,” Davies says. “But, because there are fewer of them now, it’s come as a big shock. Employers are scrambling to fill jobs.” While he believes it was always a “problem waiting to happen”, Davies adds that it couldn’t have come at a worse time, with recruitment activity being so intense. Skills shortages are also a drag on the UK’s economic growth. While these are nothing new, they are being exacerbated by the general lack of labour. The expertise available on the market is increasingly failing to match employers’ needs.

"People want to work in places where both their role and their organisation have meaning and purpose"

Another important factor, which has tended to go under the radar, is the so-called skills mismatch. Davies explains: “The vast bulk of jobs created in the UK over the past decade have been professional and managerial, but educational attainment levels have not risen in line with that growth. There is still a relatively high proportion of young people who haven’t attained A-levels, which means that employers are having difficulties filling those positions.” Corina Forman, HR director at delivery network APC Overnight, views the skills mismatch as a growing problem. “Some of this is down to the way that technology is reshaping our world. It is creating different ways of working, changing employees’ expectations and leaving everyone running to catch up,” she says. “If we as employers continue defining skills and talent as relatively fixed attributes that people either have or don’t have, the skills shortages will continue.” When recruiting, it’s important to define skills more broadly, considering how adaptable and innovative people are and evaluating their propensity to learn, Forman argues. As an example of this approach, which values aptitude as highly as experience and transferable skills, she cites the company’s new recruitment manager, who has a background in sales rather than HR. “If you define skills more broadly, you can create workplace learning cultures that are able to deal with continuous change as part of working life,” Forman says. This kind of approach will only become more important over time, according to the UK Skills Mismatch in 2030 research paper published by the Industrial Strategy Council, a body that advises the government. It indicates that, because 80% of the workforce in 2030 is already in employment today, reskilling will be vital until the end of the decade if employers and the wider economy are to avoid constraints to their competitiveness and growth. The key problem is that levels of government and employer investment in adult training, which were already low, have “remained flat at best”, the paper states. This means that, if no significant changes are made, up to a fifth of the nation’s workforce could lack the ability to do their jobs properly in nine years’ time. That’s particularly true with respect to competence in technical fields, but management skills such as decision-making could also be in extremely short supply.

"For many years, employers have been able to do what they wanted, but the shoe is now very much on the other foot"

To ensure that APC Overnight’s workforce has the required skills, Forman has introduced a range of learning and development pathways. These include a two-year leadership programme, a dedicated learning academy and a mobile app that enables employees to undertake their training in “bitesized chunks”. Samantha Edmondson, head of talent at quantum computing startup Universal Quantum, has identified informal learning events as an effective way of closing skills gaps. For example, one of the company’s quantum physicists offers an hourlong drop-in session once a week to take people through the subject’s basic concepts at their own pace and answer their questions. Learning and development opportunities of this nature also help to build employee engagement, which in turn aids staff retention.

Other ways for employers to ensure that their workers are fully engaged include having a leadership team that prioritises people, developing a culture of inclusivity supporting flexible working and promoting the notion of “purpose”, as Edmondson explains. “People want to work in places where their role and their organisation have meaning and purpose,” she says. “So this is about creating an environment in which everyone knows their true contribution.” This is not to say that employers should forget about the potential of external recruitment. “Employers need to try as wide a range of tactics as possible to offset the current situation, in which the demand for labour vastly exceeds the supply,” says Davies, who suggests measures such as expanding the number of recruitment channels they use and widening opportunities for groups such as older returners or people with disabilities. “This is about taking a more imaginative approach.” Is the labour and skills crisis just a pandemic-related blip or will it persist? It’s impossible to know for sure, Davies says, but improvements are unlikely while immigration problems continue and many older people stay economically inactive. One thing is clear, though: employers need to act urgently.

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