Labour force loses 56,000 of most-skilled and experienced to retirement

A report released by the Office for National Statistics (ONS) shows anxious times lie ahead for recruitment agencies and businesses in the UK.

According to the latest figures from 2017’s year end, the number of people in employment in the UK fell by 56,000 towards the end of last year, the largest drop in employment the country has experienced in almost three years.

Usually, a drop in employment is followed by a rise in unemployment, however, the 0.2% decrease from the end of 2017 is yet to be reflected in the unemployment statistics. In fact, unemployment actually fell.

There are strong indications this is likely a demographic issue: Instead of the expected consequential rise in unemployment, it was the number of “economically inactive” people that increased.

In a country where almost one in five people (18%) are aged 65 and over, this points to the fact that with an ageing population, businesses are particularly vulnerable to the loss of their most experienced and skilled people to retirement.

While we are a small business accountant and highly-skilled business consultant, the team at Accounts and Legal has been recently bolstered by the addition of a vastly experienced HR Adviser. Our team are equipped to guide you through a very challenging time for businesses in search of new, quality staff. Get in touch to discuss how we can help your business attract the highest level of talent.    

Impact of digital disruption

Social Media Guru; UX Designer; Chief Hacking Office. Compare a jobs website in 2018 with its equivalent a decade ago and you can’t help but notice businesses are searching for an entirely different type of employee than previously sought.

The age of digital disruption and innovation has seen the emergence of new business models, which has in turn transformed sectors and marketplaces across the world. New business models demand new techniques and new skills from the workforce – however, more than three quarters of businesses lack the digital skills required to meet these demands, according to the British Chamber of Commerce.

This challenging state of affairs is confirmed by the series, The Talent Forecast, where the Korn Ferry Institute found the competition for talent and the need to make quality hires are keeping talent professionals up at night.

The research also demonstrated how the ageing workforce is combining with digital disruption to create anxiety among the UK’s recruiters. It is apparent that there are two principal drivers for the talent shortage - firstly, a lack of candidates that have skills to move up the leadership pipeline, and secondly, the sophistication of skills to take on certain sector or niche roles.

The UK’s demographic challenge inevitably makes the first driver more severe as senior ranks are depleted by retirement, while the digital skills shortage aggravates the inability to find people capable of taking on specialist roles.

 

Competition

This increasingly tight job market puts the pressure on businesses to proactively attract the most valuable talent, which means taking a more strategic approach to hiring. While it can be tempting to make knee-jerk hires when facing immediate requirements, this approach could end up costing more in the long-run.

A more strategic approach to hiring can ensure that any organisational workforce challenges can be addressed – whether that be because the eventual hires have the right skills, are a strong cultural fit, have long-term potential, or, ideally, all three.

To develop a strategic approach, businesses need to understand how potential employees make decisions. A survey from HR Magazine found eight-in-10 professionals are unlikely to accept a job offer if they were treated poorly during the recruitment process, and will recount the bad experience to at least one person.

This demonstrates how employer branding is more important than ever and doesn’t just mean having a dedicated careers section on your website – it has to run through the core of every contact between the candidate and the company, much like effective conventional branding does with potential customers.

 

Employer branding

However, this competitive market for skills also creates another imperative – to not only compete over a small pool of desirable talent, but also to grow that pool. Historically, the responsibility for upskilling the next generation has landed on education institutions.

However, a rapidly changing economy means it’s never been more important for both private and public sector organisations to come together and promote the uptake of the relevant skills for the modern workplace.

Initiatives such as the introduction of T-levels last year made a welcome start at this. However, both educational institutions and businesses have much to gain from collaborating to create a pipeline of next generation talent.

For businesses, it represents an opportunity to upgrade their recruitment branding, sending the message that this is a business that cares about the personal skill set of an employee and the progression of their career, and that is willing to invest to equip employees with the skills to succeed.

An ageing population and a digital skills shortage make for quite a challenging combination. However, with a more strategic approach to talent management and a more collaborative perspective on developing new skills, it can be addressed.