We are all aware that the UK is suffering the effects of severe talent shortages. In fact, according to the Institute of Directors (IoD), a lack of staff is now impacting 44% of British firms. The popular and widely accepted explanation for this shortfall is that Covid is largely to blame. Granted, talent gaps were created at the height of the pandemic when individuals were forced from their roles or chose to retrain amid the lockdown. Recently, the “Great Resignation” has also been cited as a main driver behind increasing competition for talent. However, real-time data shows that the skills shortage was, in fact, already well underway before the virus struck.
Covid may have pushed the severe talent drought the UK is facing into the public consciousness, but trouble was already bubbling under the surface in the early months of last year. In fact, across all sectors, the number of people applying for new roles declined by 47% between July 2019 and July 2020, suggesting that the UK was already experiencing a significant deficit of talent before the pandemic.
White-Collar Worst Hit
While headlines of late have focused on a shortage of heavy-goods drivers drivers, warehouse operatives and hospitality staff, Broadbean Technology’s latest data shows that white-collar sectors are statistically experiencing the worst talent shortages when both supply and demand of talent are taken into account.
Demand for talent increased by over 100% across engineering, financial services and accountancy in the year to July 2021, which is unsurprising given the situation 12 months ago. However, when compared to 24 months ago, Broadbean’s data suggests talent gaps continue to worsen. When comparing data from various sectors between July 2019 to July 2021, vacancy numbers have dipped, but application numbers have tumbled at a much steeper rate.
Engineering vacancy numbers doubled (up 103%) between July 2020 and July 2021. When we compare the latest data with July 2019, though, vacancies are down by 20%, while the number of applications has decreased by 54%.
Similarly, financial services saw vacancies double (104%) between July 2020 and July 2021. For July 2019 – July 2020, vacancies dropped 12%, while application numbers declined 57%. For accountancy, vacancies were up 104% between July 2020 and July 2021, but down 31% on 2019 figures, while application numbers from 2019 – 2021 also fell 56%.
Through analyzing historic data, we can assume that the current skills crisis is perhaps more severe than first thought. The reasons behind today’s talent gaps are also likely to be more complex than many like to imagine. We are now perhaps seeing the effects of a failure to train, upskill, and pipeline sufficient talent, and we cannot ignore the impact that Brexit has also had in this area. In fact, a report released earlier this year by the Economic Statistics Centre of Excellence estimated the drop in the non-UK population at 1.3 million.
Firms across the UK are working to fill gaps in innovative ways. There has been a boom in businesses offering “golden handshakes” for new joiners, for example, while Scottish Power recently opened applications for a “returner” employment program aimed at people who have lost a job in the STEM field due to Covid or taken a career break.
However, despite these efforts, there is an acute need for an appropriate route for independent professionals to encourage people from outside the UK to work in the country. The IoD is just one organization that has hit back at government advice to invest in domestic workers, saying the move will not solve short-term labor shortages. The lobby group has instead called for new, flexible visas that would allow foreign workers to step in to fill crucial roles after an exodus of workers due to Covid and Brexit.
According to the Office for National Statistics, the number of open vacancies across the UK hit one million for the first time ever in July. However, we must recognize and accept that skills shortages have been brewing under the surface for some time. For the sake of the UK economy, we must find a long-term solution to plugging the gaps that have been created by a myriad of external factors, and accept that the current situation had been masked by the pandemic, rather than being created by Covid.