What can you do about skills shortages?

Whilst the recent focus has been on skills shortages such as HGV drivers, the hospitality industry, and seasonal agricultural workers, skills shortages are currently one of the most acute issues facing much of the UK business.

Covid-19 has disrupted the labour market with a large number of employees changing jobs (‘The Great Resignation’) with the position in the UK made worse by leaving the Single European Market and no longer being able to access skills on a continent-wide basis. Migration from the European Union to the UK last year went into reverse for the first time since 1991. The result is that employees are no longer competing for jobs, employers are competing for employees.

On the face of it, larger businesses might be thought to have an advantage over smaller ones here. They have deeper pockets and if they are present in more than one country, can more easily move production to where the labour is available or move employees internationally. However, smaller businesses do have one crucial advantage: they can be more agile and more flexible.

Here are 5 things to think about in order to help you access and retain the skills your business needs.

  1. Making work more meaningful - Most employees do not leave because of their salary levels. They leave because they are unhappy. Research suggests that 9 out of 10 people are willing to earn less money to do more meaningful work. This lack of correlation between work satisfaction and money has been steadily growing since the beginning of the 2000s. A smaller more flexible business should find it easier than a larger one to create that sense of collective shared purpose that is at the core of making work more meaningful.
  2. Innovative and individual reward packages for attraction and retention - Whilst reward packages will not in themselves lead to long term retention, if tailored to the individual, they can contribute to more meaningful work (‘my company cares about me as an individual’). These could include elements such as allowances or equipment provided for remote working through to providing EV vehicles, charging points or solar energy panels, all of which can be achieved tax efficiently. Aligning reward with your cultural and sustainable objectives can help a reward strategy stand out from the crowd, as well as be more cost-effective for all parties.
  3. Employee development programs to upskill - Whilst you might not be able to recruit the skills you would like, you may more easily be able to recruit and train to the skill level you need. You should ensure that you are making the most of things like the Apprenticeship Levy to underwrite costs in creating these training programs, as well as developing skills strategies that go through the entire organisation and enable employees to grow, develop and innovate the business.
  4. Recruiting from overseas - If historically your business has looked beyond the UK for its labour, this has of course become more difficult since the UK left the Single Market. The Skilled Worker Visa requirements now have to be navigated by businesses seeking to maintain their access to non-UK labour. The minimum salary of £25,600 is a problem for some although we have heard anecdotally of cases – for example in the hospitality industry - where salary offers have been increased to this level in order to qualify for the visa even though the ‘normal’ salary for the role might be significantly below this level.
  5. Moving your business to where the skills are - If despite all this, you cannot attract the skills you need for your business, then the remaining option may well be to move your business, or at least parts of it, to where the skills are. This may mean no more than embracing remote working or outsourcing some functions. However whilst many businesses, because of supply chain disruptions, are looking to shorten their supply chains for goods, others are looking to move functions to where labour is more plentiful especially where services can be delivered digitally and so are less potentially affected by the disruption. This might be anything from offshoring administrative functions to third party providers to relocating some manufacturing facilities overseas. The first place most businesses look is usually to move business functions to a location within the single market so as to regain, amongst other things, the benefit of the free movement of labour. 

We would be happy to help you create solutions for your business and to assist in specialist areas where you do not have in-house resources.

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