The Future of The UK’s Workforce

It is fair to say that since June 23rd, 2016, when the UK rocked up at polling stations to vote on Brexit, we have experienced the most turbulent of times. We spent days, weeks and months listening to politicians embarking on a merry-go-round of one-upmanship over ‘getting Brexit done’, endured several general elections and then just when it looked like we were finally moving forward, Covid-19 struck.

The immediate damage of Covid to our economy was obvious and we knew that this was an exceptional lifetime event that the whole world would be paying for, for many years to come. As we approach the end of 2022, there are still supply chain issues hampering parts of industry and businesses that are struggling to make back Covid losses.

This was all a storm we could probably have weathered until February this year. Indeed, at the end of last year, the UK was predicted to be the G7 country that bounced back from Covid the quickest. Putin’s war on Ukraine and the subsequent pressures this has put on energy supplies have hampered growth and increased inflation. A dependency on expensive gas for heavy industry and home heating could see many countries, including the UK, enter a long period of recession with the Organisation for Economic Co-operation and Development (OECD) projecting a slowdown in global growth to 2.2% in 2023. Global growth needs to grow by about 4% to keep pace with rising populations and these latest forecasts mean that incomes per head in many countries will be lower.

What Does This All Mean for the UK Jobs Market?

This is where the jobs market does not quite match what we normally see in periods of recession. A decline in economic growth has coincided with a high number of job openings. In fact, the UK has experienced a job boom with vacancies reaching the highest levels in 2021 and 2022 since the launch of the Recruitment and Employment Confederation’s (REC) jobs market tracker 24 years ago.

The latest ONS data shows that even though there was a slight decline in vacancies in the quarter of August – October 2022, vacancies still stood at 1,225,000, a figure which is still well above pre-pandemic numbers by 429,000. This high level of vacancies has been compounded by a declining workforce with UK economic inactivity estimated to be at 21.6%, which is 0.2 percentage points higher than the previous three-month period and 1.4 percentage points higher than before the pandemic. Coupled with this, the number of people who have dropped out of Britain’s job market since 2019 and who now cite a long-term illness or mental health problems has risen by half a million or about 25%.

What does the Future of UK Employment look like?

It would be fair to say that these are unprecedented times and as we have seen over the past few years, predicting the future is not easy. For employers, finding skilled candidates is going to remain a challenge. Candidates that are actively seeking a new job are also looking for a rise in their pay that their current employers cannot offer them. Although we have seen a large increase (7%) in starting salaries, this is still not matching the rise in inflation. Gaps in workforces are being largely covered by contract workers, especially those with more unique skill sets that companies need to facilitate their projects and give them more flexibility to adapt their workforce as their business needs change. The flexibility of contract roles brings benefits to candidates as well. Short-term positions allow professionals to gain a broad range of experience in different roles, industries and businesses.

Workers are also demanding more from their employers. Businesses are being forced to rethink their culture around diversity, inclusion and sustainability, as well as looking at how they compensate their employees with salaries and benefits. Businesses need to understand what drives and motivates workers, especially the younger generations, if they are going to attract the talent they need in what will no doubt remain a competitive market going into 2023.

Areas of Growth in the Jobs Market

Most notably this is going to be heavily focused on the UK’s drive for Net Zero. Investment is being pumped into creating sustainable and clean energy, essential not just for our Zero emissions targets, but to give the UK control over its energy supplies. The government is heavily invested in Nuclear Energy demonstrated through their backing of Sizewell C and Rolls Royce SMR. There is also a drive for the UK to have more control over battery production and ambition for 5GW of low carbon hydrogen production capacity for use across the economy which alone could see the generation of 100,000 jobs by 2050.

What do candidates need to consider when looking for a new role?

At this very moment in time salary is a big consideration for everyone. But Salary is for the here and now. Candidates also need to consider career stability and growth and gaining the future skills and experience that the jobs market of tomorrow will demand. Candidates need to consider a future employer’s reputation and whether that organisation’s values match their own. For many, social responsibility is high on the agenda, as is an increased need for employees to manage their work/life balance; looking to their future employer for the flexibility and freedom to enable this.

The biggest thing to take away from the jobs market today is that despite the economic instability we are experiencing, there are still opportunities in the jobs market that may not have existed in the recessions of the 80s and 90s. The great resignation never really happened and employees are considering their career choices wisely. Employers need to embrace this and make sure that what they offer to their potential candidates is going to be sustainable moving forward and that they are meeting the moral needs of the candidates of the 21st century.