Labour Market Conditions – August 2022 – What to expect?

The UK labour market is under pressure from worker shortages like never before, however, the latest reports show that the hot labour market in the UK is giving signs of cooling. Businesses turned out to be more cautious when it comes to hiring, and workers suffered a record fall in their basic wages when adjusted for soaring inflation.

The number of people in employment grew by 160,000 in the April – June period, but this is a lot less than expected in the Reuters poll. The expectations pointed to an increase of 256,000. The number of job vacancies fell for the first time since mid-2020, the Office for National Statistics said, but stayed close to a record high at 1.2 million.

Britain’s labour market emerged from the coronavirus pandemic with unemployment at its lowest levels since 1974 due in large part to a shortage of domestic and foreign workers.

In response, employers have increased their pay to attract and retain staff. The ONS data showed wages excluding bonuses in the second quarter were 4.7% higher than a year earlier, picking up pace from the three months to May and potentially adding to concerns at the Bank of England.

How do the labour shortages affect the recruitment industry?

The recruitment industry is incredibly difficult right now. Employers are now more likely to say they plan to upskill existing staff in response to recruitment and retention difficulties. This is a positive step, as recent years have seen a decline in employer investment in training. Reform of the apprenticeship levy could help by aligning incentives and allowing organisations to spend the levy on training that suits their business’s needs. In the battle to secure the labour supply needed to meet demand, retention is as important as recruitment. Whether by holding on to staff or training them, employers are alleviating skills shortages by focusing on their existing workforce.

Reports show that the biggest issues when it comes to find the right workers is being especially felt by industries such as logistics and transportation, manufacturing, hospitality, construction, IT, accounting, and engineering.

“If employers can modify their approach to recruitment, offer higher wages, more flexibility, think more creatively about the talent they’re trying to attract, and how they attract it – we could see improvements to the labour shortage,” Angela Barnes, employment lawyer and business immigration specialist at Napthens Solicitors said.

The Employment of young people will help businesses weather the recruitment storm

Rethinking how businesses attracts and retain workers under 25 will put employers in a much stronger position for the future.

What can we do to better engage and connect with young people?

HELP THEM GROW – Bringing in employees early and offering the chance to learn while they earn will be a hugely attractive prospect for many young people. Young people are driven to learn and develop and every engagement with them is an opportunity for them to grow.

CELEBRATE PROGRESS – Young people benefit from recognition, 71% of of them telling that it is especially important they feel valued at work. By offering them the chance to work their way up through the ranks, while giving them the tools for personal growth and development, a business can open a world of opportunities – and earn a degree of loyalty in return.

WORK WITH THEM – Recruiting people is one challenge, retaining them is another. Speaking to their passions, providing support and training, and being authentic will go a long way to winning their loyalty, but understanding how they view their future is also important for any business looking to keep their homegrown talent, well, at home.

Based on a study 44% of people age 16-24 expect to have changed jobs more than 4 times by the age of 30. Businesses must be responsive, culturally relevant, and try to comprehend the real-world context of every age group to recognise how quickly young people transition through professions, life phases, and changes in their early years. As their professions advance, this will develop an agility that will support maintaining that relationship.

There is no getting away from the recruitment crisis we are in, and the knock-on effect today’s current shortage of workers will have on our economy. But there are significant measures every business can take to make not only their own futures more certain, but also that of individuals. By following a few well-informed guidelines and adopting an outward-focused, forward-facing attitude, any organisation can defy the projections and set themselves up for greater success.

Are you an employer struggling with staff shortages? Please send us an email to info@impactrecruitment.co.uk or give us a call on 01604 239555 to find out how we can help you.

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