Where have all the workers gone?

The number of job vacancies in Britain reached a record 1.3 million between March and May. Staff shortages across many industries, from haulage and transport to hospitality and healthcare, are causing difficulties for employers and consumers alike.

It’s easy to point the finger at the post-Brexit exodus of European workers from the UK – a trend that was exacerbated by the pandemic. And it’s equally easy to conclude that a reversal of Brexit would solve the whole labour problem.

But the reality is that the country’s skills shortages are a complex and nuanced issue – and the firms that get to grips with that are those that are more likely to succeed.

Post-pandemic talent pools have shifted dramatically

Workers now expect much more flexibility and choice over where, when and how they work – whether they opt for the office, work remotely, choose a hybrid arrangement or even operate on a contract or freelance basis.

There are five important dimensions to think of when embedding a successful inclusive working strategy, in which all jobs can flex when needed:

The when looks at workers’ hours/ shifts and capacity to change these to more flexible options.

The where looks at the location of work and the ability to vary this; and the infrastructure requirements needed to make it happen.

The what looks at varying the job content, and workers’ ability to share or exchange tasks.

The how looks at varying the intensity of work and adjusting effort based on workload changes.

The who looks beyond the traditional payroll workforce to freelance or contract workers as well as the potential for automation or the two combined.

Seeking talent in new locations requires data-driven research

As businesses seek out new locations for their operations, the local talent pool is a key consideration. But preconceived notions of the best destinations may be misleading if they’re not backed up by targeted analysis.

For example, Bangalore in India has been a prime destination for IT businesses needing software engineers. But that demand has boosted salaries and led to local shortages, while at the same time other pockets of engineering talent are emerging elsewhere.

A marketing company looking for a new office location may be aware of the wealth of skilled marketing professionals in the south coast area around Brighton – but not necessarily of the fact that most of them commute to jobs in London rather than working locally.

Labour market analytics services can help firms by using data analysis to shed light on where in the world the skillsets they need are most readily available, and what those skills might cost.

Some industries have been particularly hard hit by skill shortages

The UK’s labour shortage is widespread, but not all sectors are similarly affected. Certain industries have seen an exodus of skills, a prime example being the traditional IT industry, which is struggling to recruit engineers who are being lured away by interesting tech-focused jobs in other industries.

These trends highlight the need for businesses to upskill or re-skill existing employees.

Here are four strategies to consider:

Build: Many companies provide training packages that enable existing employees to expand their skill sets and take on new challenges.

Borrow: An alternative is to look at different models of employment, for example outsourcing specific operations to subcontractors or using freelance talent hubs.

Buy: Businesses’ response to skills gaps has historically been to poach talent from competing firms, but the current labour shortage could make that a difficult option in practice.

Bot: Certain operations can be supplemented or replaced by technological solutions.

Clearly the UK’s tight labour market – as well as skills shortages in other parts of the world – are giving business leaders a lot to think about. Not only do they need to nurture and retain their existing workforce by providing flexible working choices, but they must also work out where to seek out new talent and how to deal with skills gaps when they arise.

Mercer is a strategic partner for the CBI’s Future of Work conference, which will be looking in more detail at these challenges, and discussing ways to respond.