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Business Insight: What’s Really Behind the Labour Shortage in the UK?

In a recent blog article, we examined the current labour shortages that are affecting the UK economy, looking at the broad context and possible causes of the current crisis.

We wanted to drill down a bit deeper, and find out, straight from the types of businesses and organisations affected, what their experiences of the labour shortages were.

Here’s what we found.

The UK Labour Shortage – caused by COVID-19 or a deeper issue?

The government is insisting that the massive labour shortages affecting the UK economy are caused by the lingering effects of COVID-19 on supply chains. On the surface, this claim appears partially correct. There’s no denying that national lockdowns across the world have disrupted supply chains, slowing them and grinding them to a halt in some cases – in 2020 the volume of world merchandise trade declined by 5.3% partly as a result of this. However, the UK’s last major lockdown restrictions began to ease on 8th March.

Surely, if just COVID disruption was the cause of the labour shortages, we’d be beginning to see signs of improvement, now that most of the disruption like lockdowns and curfews seem behind us?

The reality is that there are probably multiple, complex causes of the labour shortages which remain unaddressed, rooted in long-term structural issues with the economy that organisations and successive governments have failed to tackle over the last decade.

In our conversations with those affected, we found that there appear to be more nuanced and complex issues behind the current UK labour shortage, rather than just a simple case of Brexit effects and COVID-19 effects.

People are waking up to the reality of bad pay and conditions

One consequence of the soul-searching provoked by the pandemic has been people evaluating their skills, careers and general quality of life – and this could potentially be one of the causes behind the labour shortage afflicting the UK at the moment. To put it brutally, employees are beginning to wake up to the bad conditions, poor wages and punishing work-life balance that has defined many roles in the UK for years. And they’re refusing to put up with these things anymore.

“People seem to have had enough of being treated poorly by their employers, there seems to be a slow realisation that the system really is stacked against the average person.” Carmel Young, lead editor of Wheelie Great, says, “I feel the labour shortage is not really a shortage, but more so a lack of potential employees who are willing to be treated unfairly... A lot of companies are not doing their part to appreciate the true value of these potential employees.”

Working some of the longest working hours in the European continent and suffering from the weakest wage growth in G20 Countries, it’s no surprise that workers are waking up to the fact that they’re being taken advantage of and exploited.

For Carmel, the solution is radical transparency on the part of businesses. “I believe to combat this “shortage”, employers need to do their part and offer complete transparency in their job listings and throughout the hiring process.” she says. She thinks that employers should take responsibility for their own recruitment to help them better connect with suitable candidates.

“A lot of companies (we were also for a while) are solely resorting to recruitment companies to fill their roles.” she states, “This is not the way to do so, and there is a huge chunk of the population here who do not utilize the services of these recruiters.”

Brain drains and accelerated changes

Many businesses and organisations have found that COVID-19’s effects on the UK economy has inflamed existing structural issues within the UK labour market, causing new – and worsening existing – labour shortages.

Specialising in digital marketing recruitment, Graham Grieve, SEO Consultant and Director at A1 SEO Glasgow, has experienced labour shortages first hand – but not for the reasons that you might first guess. For him and his organisation, the pandemic has exacerbated the effects of London’s tendency to poach talent away from the other countries and regions of the UK to the capital.

“Up here in Glasgow, we suffer from the “brain drain” as some of our best talent relocates to London. This has always been a problem for highly skilled roles in the West of Scotland.”  he says.

The London ‘brain drain’ has been an issue for decades. A recent report by the Institute for Fiscal Studies found that, by age 27, graduates in England are 10% more likely to have moved from the area they grew-up than non-graduates.

Although, there are some signs that COVID-19 has reversed aspects of the brain drain, with more young graduates leaving London than before the pandemic hit, for particular industries, like Graham’s, the problem is simply intensifying as changing circumstances in the economy result in changing business priorities, and thus, changing demands for skills.

 “Demand for digital marketing, tech and IT skills has dramatically increased due to the pace at which eCommerce and further “digitalisation” of the economy is now at.” Graham adds, “COVID has literally propelled the industry and its demand forward by 10 or so years.”

For many business, increased demand for particular skills in the capital means a reduced supply of labour in their own area – in other words, a labour shortage. 

Lack of training and employee development

Graham at A1 SEO, the solution to labour shortage is upskilling existing staff and ensuring that they have the skills to thrive at work.

“We’ve had to build systems in our business for scaling up entry level staff’s knowledge. This has actually worked really well - we now have a larger section of highly skilled employees for more diagnostic type work via our “management” team and our lower level delivery tasks are being handled more efficiently via processes at a lower cost.” he says.

“[We need to] create systems for scaling up staff knowledge. This is a win/win scenario; you have systems to ensure your quality level remains consistent and the staff carrying out the work are actually learning on the job and mastering something. Don’t get me wrong though, setting up processes is a big, chunky project, but the payoff is delightful.”

Other business owners agree that training and upskilling is probably one of the best routes out of the current labour shortages.

“I’m afraid there is no easy solution for labour shortage[s].” Nick Chernets, CEO of digital agency, DataforSEO, says, “Businesses have to invest in people’s growth and be prepared to wait a while before seeing concrete results.”

Training our way out of a crisis

With the labour shortages and an ever-widening Skills Gap threatening to cause a major headache for businesses across the UK now and in the coming years, it’s clear that we need to take action immediately. Short-termist attitudes towards employee development have held sway across our boardrooms for too long – what we need now is a long term strategy for developing the skills that we need.  Training and upskilling our existing workforce is one of the most efficient ways to do that.

Whether that’s simple training courses or full, online professional qualifications, any action towards futureproofing the skills and knowledge of your employees is a step in the right direction.

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