We’ve all seen it in the news; global talent shortages have continued to increase over the last decade based on a survey of more than 40,000 employers worldwide, including employers of all sizes – large (77%), medium (75%), small (74%), and micro (71%). This 2022 it has reached a 16-year high, according to a report from ManpowerGroup.
However, the UK seems to be taking a big hit. The United Kingdom is one of the major globalized economies, ranking fifth in the world. It attracts more migrants from all over the world than any other country, because of its strong economy, high standard of living, and excellent working conditions. But this year it seems like the UK is falling in deep rut in terms of talent. The Office for National Statistics (ONS) recently reported that vacancies in the UK have reached a record high of 1.2 million. Brexit, combined with COVID-19, has resulted in a significant decrease in the number of overseas workers coming to the UK, resulting in severe shortages, especially in sectors such as supply chain, retail, and agriculture.
However, it’s more than just about Brexit and the pandemic. According to McKinsey, technology has played a large role in the country’s talent shortage. The adoption of automation, as well as other technologies, has resulted in profound, radical reforms in the UK workforce.
Moreover, the UK is also home to a predominantly aging population. In 2019, approximately one-fifth of the UK population (19%), or about 12.3 million people, were 65 or older. Shrinking birth rates, rise in early retirees, low unemployment rate, and growing number of people changing jobs have compounded and resulted in the biggest talent crunch ever in UK history.
As a result, several industries are scrambled by fear due to economic uncertainty. Demand for occupations such as managers, specialists, and health professionals are expected to become challenging to meet if UK employers do not take immediate action.
What Does Growing Talent Shortfall Mean for the UK and its Employers?
Talent shortages are the biggest barrier to business strategies. They prevent countries from expanding and reaching their full potential. But what does this mean for executive leaders in the UK?
Lack of skilled labor can slow a country and company’s growth
Labor is the soul of the production process of an economy’s goods and services. Individual labor supply, both in quantity and quality, is an important factor to determine the economy’s level of production and rate of growth.
The labor market is made up of people who have jobs, people who are looking for jobs, and businesses that are looking for employees. This interaction between people providing labor services and companies requiring workers’ services is what labor represents. It determines employee wages and salaries, as well as the total number of people employed.
If labor shortage persists, wages and inflation will rise, and supply chain issues will emerge in the short term. In the long run, it could halt GDP growth, or worse, cause a recession.
Slow growth could force companies to take shortcuts
It’s a domino effect; slow growth could cause a company to cut corners elsewhere in its operations in order to save money and increase profits. This can manifest as less stringent maintenance or quality-control practices, which may result in losses.
For instance, if the company is in manufacturing, machine breakdowns caused by poor maintenance schedules can result in costly repairs and investment loss, which may not be insured and thus represent an out-of-pocket expense for the company.
Furthermore, a lapse in proper quality control may result in costly product liability suits, ultimately affecting their bottom lines.
Beating Talent Shortage: Do UK Employers Need to Do something different?
Focus on skills and career development
As employee turnovers continue to rise in 2022, organizational priorities must shift. While monetary incentives can make employees happy, it isn’t the only way to keep them motivated.
Executive leaders need to take into account that employees today are purpose-driven. Their needs have changed. They look beyond compensation packages and focus more on how an organization values career growth and development.
That’s why executive leaders must rethink and align their talent needs with an individual’s career goals. It can not only be a powerful force to attract talent, but also, it prepares the organization to meet the challenge of engagement, retention, and productivity. In short, effective and focused career development ensures that the organization has the right people in the right jobs who are fully committed to the business plan.
Invest in employee experience
Employees today want to work for companies that provide them with a sense of purpose and joy.
Investing in employee experience and well-being will be a true market differentiator. According to ManpowerGroup’s latest Talent Shortage survey, the most important incentive for attracting and retaining workers is hybrid working and employee wellbeing.
In addition to offering flexible working options, employee expectations and experiences are inextricably linked to the current state of the world and are essential to onboard the best talent. Further, these two factors are heavily influenced by the macroeconomic and social factors in which we live. For instance, the world went full remote because of the pandemic. Now, when companies are returning to the office, flexible working schedules and negotiated working arrangements have been important factors for high productivity and job satisfaction. Additionally, as the demand for digital transformation grew, some employers provided opportunities for digital skill development. It fostered an environment that motivated employees and provided incentives for higher-quality work.
Employers must be aware of their employees’ full range of needs to help them perform their best. Companies must reconsider strategies for meeting and exceeding employee expectations by addressing employee well-being, flexibility, and growth.
Acquire talent from unconventional sources
Today’s workplace is distributed. Companies are no longer bound by office walls when it comes to hiring. In our recent blog about the talent crunch in the US banking sector, we tackled the idea behind borderless hiring.
Borderless hiring is the process of recruiting talent globally without thinking about geography. Executive leaders can hire anyone from anywhere in the world without being physically present in an office. In fact, in a recent KornFerry report, India is expected to have a 1.1 million surplus of talent by 2030, which could be a boon to the UK as the talent shortage looms.
Tapping into other countries or what some may call ‘acquiring talent’ from other sources may be a viable option for some employers in the UK to combat the talent shortage.
UK employers need to adopt new strategies to succeed
To sum up, the UK is facing a talent shortage, and it’s not going away any time soon. But we also know that, as an employer, you can do something about it.
Focusing on skills and career development, agile reallocation of staff, upskilling and reskilling, and revisiting the employee experience are some key points to take into consideration. The key is to invest in your people—and to make sure you have the right strategy and resources to retain and attract talent so that you are ready for it!