How to tackle the UK’s skills shortage

We have entered into something of a skills crisis in the UK and it is not only challenging for recruiters, it is depressing productivity and could stagnate the economy.

This won’t be news to anyone in the recruitment industry, especially those working in areas with endemic skills shortages, such as Health & Nursing, Social Care and Public Sector. Although the events of the past few years have intensified the shortages, this is a historic problem created by a combination of education shortfalls, an ageing population, and a lack of workforce training. Much needs to be led by government but there are actions recruiters can take to make finding skilled candidates easier.

Historic skills shortages

There’s no doubt that the pandemic and Brexit, followed almost immediately by soaring inflation and both political and economic turbulence, have exacerbated labour shortages but this is not a new problem. Skills shortages existed in the UK long before the pandemic and for a number of reasons.

• A lack of education in schools about the jobs available in the work force is one, as is an ongoing issue with the lack of females in a variety of industries. Inadequate teaching of the skills that children will need in the future world of work, particularly IT and tech skills, has been an issue for many years. In fact, a report undertaken by assessment platform Questionmark found that just three of the ten skills the World Economic Forum predicts businesses will need by 2025 are possessed by more than half of UK workers.

• Workplace training has also decreased, meaning workers aren’t upskilling at the rate they should be. The Learning and Work Institute reports spending on skills in England will still be £1 billion lower by 2025 than in 2010, with research showing that employer investment in training fell more sharply during the pandemic than after the financial crisis. As Chancellor in 2022, Rishi Sunak revealed that UK employers spend just half the European average on training their employees.

• Ultimately, training and upskilling – whether provided by schools and higher education institutions, employers or the government – are not delivering the skills needed to meet demand. As the historic skills crisis in industries such as Health & Nursing attests to, nothing much has changed in the past few decades. Data from McKinsey shows that, except for communication and planning, the types of skills shortages in the UK workforce hardly changed between 2011 and 2019. The Wave April 2023 Recruitment Trends Report found that Health & Nursing posted the highest number of jobs of all industries – surpassing even IT & Internet which had held the top spot since December 2021. However, in the same month it received the fewest average number of applications per job – just 2. Many industries are competing for talented candidates for which demand is constantly growing.

• The UK’s ageing population but decreasing birth rate over the past two decades means that there are far fewer people in the workforce than there were. The rising economic inactivity rate has been driven at times by older workers taking early retirement and yet, in the next few years, the UK’s working-age population is expected to grow only 0.4 percent per year.

Post-pandemic skills crisis

The combination of the pandemic, Brexit and soaring inflation has intensified the labour shortages into what many are calling a crisis.

• Partly because of Brexit and partly because of a desire to go back to their home countries during the pandemic, we have lost a huge number of EU workers. This has affected some industries – such as Health & Nursing, Hospitality and Agriculture – particularly. Home Secretary Suella Braveman’s comments that the solution is to simply train up UK workers to drive trucks, be butchers and pick fruit misses the point entirely. We do not have the numbers of people required that are willing or able to fill those vacancies left by foreign workers.

• The UK recently hit a record high number of people out of work due to long-term sickness – a huge 2.55 million people in the first quarter of 2023 according to figures from the Office for National Statistics (ONS). Some of this is Long Covid, some back and shoulder issues possibly caused by inadequately set up remote working spaces, and much can be attributed to the staggeringly long NHS waiting lists which have hugely worsened since the pandemic.

Labour shortages in 2023

We have been in a high jobs, low candidate market for a couple of years now and, although vacancies have been falling for the past 10 months and the Wave April 2023 Recruitment Trends Report has shown that April’s jobs were lower than they have been in over 6 months, they remain above pre-pandemic levels. Meanwhile, the unemployment rate, though beginning to slowly tick up, is still well below pre-pandemic rates and there are 500,000 fewer people in the labour market than before the first lockdown.

What all that equates to is that there are simply not enough people in the workforce to fill the number of vacancies in the market. It is a real problem and one not likely to ease any time soon. Many believe that a tight market, especially in certain sectors, will become a permanent feature of the UK labour market. Unless something changes drastically, such as an easing of immigration laws, we do not have enough people either in work or looking for work to meet demand. As a recruiter that means you have to find your competitive edge.

The 3 types of shortages

On a recent Talent Matters podcast episode, hosted by Wave CEO Dave Jenkins, Kevin Green highlighted the three different types of shortages that affect industries and job types to varying degrees. Most employers will be struggling with at least one, if not two of these shortages.

• Labour shortage – these are jobs where people don’t need previous skills or qualifications and can be trained on the job, examples of which can be found in industries such as Manufacturing, Agriculture, and Hospitality. In these cases, employers and recruiters are just looking for candidates with the right work ethic to turn up and get the job done.

• Skills shortage – this shortage is more pronounced and will be longer term. This is where there are not enough people in the labour market to fill the jobs available with the right experience and skills. Examples of skills shortages can be found in Digital, IT and Engineering. There are more vacancies in those areas than there are people with the required skills and experience in the labour market. Kevin notes that these shortages have increased manifold since his tenure at the REC 5 years ago.

• Talent shortage – Kevin terms talent as skills+, i.e. a person with the right skills and experience but who is also change-oriented (they can handle and deliver change), someone who can think strategically but roll their sleeves up and get the job done, and someone that can lead, motivate and inspire.

What recruiters can do

We’ve established that there is a historic skills shortage across the job market that has worsened to a point it could now be termed a crisis. And we know that the market is likely to stay this way for a long time. However, there are ways to continue to find talented candidates that are a good fit for your jobs. What it will often mean is being adaptable and agile.

Make your jobs more accessible

The ONS has shown that the employment rate increased to 75.9% in Q1 2023 and that this was largely due to part-time and self-employed workers. There is clearly demand for part-time work so use this as an opportunity by embracing part-time workers and those wanting to move into part-time work. Does the job you’re advertising need to be full-time or can it be part-time or a job share? Can there be any other flexibility in terms of location or hours? This will mean talking to your clients, acting as consultant, and advising them on what candidates want and need from a job to make it attractive or even possible. The unemployment rate increased to 2.9% in the same period, driven by long-term unemployment – why are there so many long-term unemployed, what are their barriers to working? This is what needs to be thought about and acted upon. We need to make it easier for people to work.

When the Chancellor himself believes that the “default” location for workers should be the office unless there’s a “good reason not to be in the office” it can feel like an uphill struggle but even the government agrees that we need to get more people back into the workforce and flexible working is one solution. Andrew Mawson, founder of Advanced Workplace Associates, which supports flexible working, argues in a BBC News article that getting people back into work means “we need to design work to fit the way people live, the technology they use, and the opportunities for flexible working.”

What we need to do is build a labour market that works for everyone and change is happening. Data from the Wave Recruitment Trends Report for 20223 shows a fairly consistent upward trajectory for jobs with flexible, remote and/or working from home options from the start of 2020. The growth is incredible: from January 2020 to its peak in March 2022, jobs advertising flexible working posted through WaveTrackR increased by around 100-fold. And they remain far above the numbers from early 2020.

Focus on soft skills and potential

More of a focus on soft skills such as critical thinking, adaptability, problem solving, teamwork and communication could help to bypass some skills hurdles. This won’t work for jobs that require a certain level of training and study beforehand (for example a solicitor or doctor) but there are many jobs that could hire talented candidates and offer training within the role. Again, this will involve recruiters taking on the role of consultant to clients, advising them on the current state of the market and the realities of the skills shortages. Training and career development is highly valued by candidates so highlighting this in the job advert will further help with candidate attraction.

Nurture your pipeline

People are getting placed into jobs all the time, the wheels are still turning – it’s just become far more competitive. Because of this, recruiters can’t simply rely on posting a job out and waiting for applications. You should be constantly building and nurturing a pool of candidates that possess the skills your industry needs, both passive and active, so that when a job comes along that requires those skills, you can directly approach one or more candidates before going out into the market.

It’s something Wave CEO Dave Jenkins chatted about to well-known recruitment industry figure Mitch Sullivan in Talent Matters podcast episode 202. With soaring job board prices and a general lack of jobseekers, recruiters need to widen their search for talented candidates. For Mitch, this means first and foremost that they should be carrying a proprietary database, collecting candidate details and storing them in their CRM. They should be building an audience on LinkedIn. The stronger those approaches get, the less reliant on a single source, such as job boards, recruiters will have to be. Growing an audience, making connections, forming and nurturing relationships, will all help to build up instant access to people who do the types of jobs you need to fill.

The skills shortages that we are seeing across the labour market aren’t going to ease any time soon. What that means is that recruiters need to find ways to be more competitive and to help those into work that have potential but might ordinarily be discounted because they don’t tick every box. It means adapting. It requires the barriers to work to be lifted for the thousands that would work if they could. Not every change needed is under the control of recruiters but what can be adapted, should be, in order to find talented people work and fill those vacancies.  

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