State of the Nation: Labour Market Update
Mark Cahill, Managing Director of ManpowerGroup UK & Ireland, addresses several of the key issues facing employers in 2018.
Shifting demographics, greater individual choice, client sophistication and technological revolution have become increasingly evident since ManpowerGroup identified these trends almost a decade ago as part of The Human Age era. Together, they have contributed to the emergence of a Skills Revolution where people must continually adapt and evolve their skills to futureproof their employability and to make certain organisations have a workforce with the right skills to ensure future growth.
We are also experiencing a sustained period of continued change. As we move towards the end of 2018, this atmosphere of uncertainty shows no sign of easing – from the introduction of new legislation, to the question of what our future relationships with the European Union and other countries will look like.
There is much talk about: weakening consumer confidence; how changes in shopping habits are impacting our High Streets; the UK’s economic performance lagging behind our European neighbours with GDP growth of 0.1%; and employers potentially reducing their future investments in the UK. Coupled with this are the continued pressing issues that face employers about how they attract, engage and retain the talent they need.
From a workforce management perspective, what are some of the most important issues at play? And what can we as employers, and the government as policy makers, do to address these?
The Talent Shortage
Firstly, we must recognise that the ever-present talent shortage is real and is not getting easier – in fact, it is likely to get more difficult. We are at levels of employment not seen since the early 1970s, with over 32 million people in work and an unemployment rate of four percent – the lowest since 1975.
In our own Talent Shortage Survey, one in five UK employers struggle to fill vacancies due to a lack of applicants. Government data shows that there are now just 1.6 unemployed candidates available for each vacancy, compared to 5.8 in 2011. And our ManpowerGroup Employment Outlook Survey shows that over the last six years, a balance of around +5% of employers want to add to their headcount at any time.
To address the talent shortage, it is important that employers take active steps to attract, skill and retain people. In a tight labour market, strong employer brands have never been more important. All employers need to look at this closely – what do your future employees want from work? What are the values of your organisation, and will they attract the people you need? Do you support flexible working or volunteering opportunities? What are the training and developmental opportunities you offer?
Impact of Legislation
Secondly, increasing employer costs and the likelihood of more legislation increases the burden on employers. There are several issues at play here:
- The looming likelihood of the off-payroll legislation (IR35) being applied to the private sector from as early as 2019 will add to the administrative burden for many employers. Not only will they be required to manage the system, but it may also add to costs, as some contractor wages will increase. It may also add to employers’ talent shortage challenges, as contractors leave the country. If this is to be introduced, it should ideally be delayed until at least 2020 for the full impact of the lessons from the public sector to be learned and to ensure employers have the time to properly prepare.
- The Apprenticeship Levy has added costs for employers, with prescriptive restrictions on how this can be used. Again, we believe this should be reformed and that employers should be permitted to use this for other means too – such as other compulsory training or supporting initiatives such as work experience. At ManpowerGroup, we have significantly extended the number and type of apprenticeships we offer our people, but we will struggle to utilise all the Levy available to us.
- The outcome of The Taylor Review of Modern Working Practices is awaited and, whilst it attempts to address some important issues, such as the growth in the gig economy, the full impact on employers is not clear yet. Employers need to be aware of the possibility of further legislation they may need to follow.
Finally, the UK’s withdrawal from the European Union has created uncertainty for everyone. In line with other employers, ManpowerGroup is seeking clarity on what the future will look like and the rules that will be introduced. From a talent perspective, the number of EU workers coming to work in the UK has fallen, and we are seeing that in our own business. Access to EU talent is a key issue for us and many employers. We need a future immigration system that reflects the needs of employers and workers alike, which supports the important role of temporary labour in different roles. There is an important role for EU workers in the labour market – more so than ever before, given access to suitable talent is becoming increasingly difficult.
There are certainly challenges ahead. As a business, our approach has always been characterised as one of resilience. We have faced many challenges in the past, and through forward-looking strategies and planning, we will respond to whatever we face in the future. We help our clients navigate these changing times to achieve success.
The changes we face also present opportunities – to explore new ways of working; to focus on the numerous untapped talent pools out there; to look afresh at how we optimise technology to engage candidates; to explore ways to increase efficiencies with our clients; and to maximise how we upskill the workforce. Attracting, training and retaining our UK workforce has never been more important.
This article first appeared in the ninth edition of The Human Age Newspaper.