The data from the Office for National Statistics (ONS) led to the British Chambers of Commerce warning the government that it was “crucial” for the UK to adopt “a flexible, efficient and affordable immigration system”.Although the number of vacancies has declined over the year from a high of more than 1.4 million as people returned to the workplace after the pandemic, the total still stands at 1,034,000. The figure not only means industries are unable to attract the talent they need, but it has also resulted in private sector pay growth running at a record 7.7 per cent over the past year.
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Chancellor of the Exchequer Jeremy Hunt commented: “Our jobs market is strong with unemployment low by historical standards. But we still have around one million job vacancies, pushing up inflation even further.”The ONS data came on the heels of a survey on the tech industry showing organisations currently had 52,000 job vacancies, and after the financial services organisation, TheCityUK, demanded the government introduce “fast-track, short-term working visas” to help fill the current skills gap.Jane Gratton, head of people policy at the British Chambers of Commerce, said the persistent tightness in the labour market was adding to the costs and difficulties facing businesses.“Staff shortages continue to damage growth and business activity. Our research shows that three quarters of firms are facing skills shortages, and in some cases, this means turning away new business,” she said.“Fierce competition for skills, wage demands and candidates’ expectations leave many businesses with job vacancies they can’t fill. All of this, on top of rising interest rates, and stubbornly high inflation, makes it a perilous environment for business.“The government must support more people back into work and create the right conditions for employers to invest in staff training and development, which takes time.“Firms need action now to fix the short-term issues they face in staff recruitment and retention. If employers cannot recruit and train from their local or national labour market, a flexible, efficient and affordable immigration system is crucial and must be a priority to stop wage inflation and get the UK back to healthy growth.”Kitty Ussher, chief economist at the Institute of Directors, added: “Wage costs remain very acute for employers across all sectors of the economy as businesses struggle to find the talent they need in a market that still has over two hundred thousand more vacancies than before the pandemic.“However, there are also some hopeful signs, with the number of vacancies falling and more people coming out of inactivity back into the labour market.”The ONS data on jobs coincided with publication of the latest ‘Financial Services Survey’ from the Confederation of British Industry (CBI), which showed that in the second quarter of the year, the headcount across the sector grew at its fastest pace since December 2006.Firms expect employment growth to continue into the current quarter, according to the survey, albeit at a slightly reduced pace.“The quarterly survey,” said the CBI, “found that this rise in headcount was underpinned by buoyant optimism and the fastest growth in business volumes since December 2021. Firms expect business volumes to increase at a brisk pace in the three months ahead.”Anna Leach, CBI deputy chief economist, said the improvement in financial services activity over the quarter was encouraging, with business volumes growing sharply and sentiment ticking upwards across the sector.“The fact that so many businesses are looking to bring in fresh talent is welcome and provides further evidence of growing confidence among financial services firms,” she said.The news from the tech sector, however, was not so encouraging with the new ‘Jobs Confidence Index’ – a survey conducted by recruiters Robert Half and the Centre for Economics and Business Research (Cebr) – indicating an average of 52,000 unfilled IT jobs.Despite mass layoffs announced by global players in the tech sector, the number of vacancies showed that “skills shortages remain a significant challenge for tech firms”, said the report.“Despite this, the sector has shown signs of resilience, with annual labour productivity growth increasing 3.6 percentage points quarter-on-quarter.”Kris Harris, regional director at Robert Half, said that despite recent layoffs in the sector, demand for IT specialists was still outstripping supply.“While firms are using financial incentives to source the skills they need – largely driven by the demand of candidates themselves – this isn’t a sustainable solution in what remains are tight economic landscape,” he said.“The skills gap in IT has been prevalent for a number of years now, but as tech innovation continues at pace, now really is the time to take action before it’s too late for some businesses that will ultimately lose their competitive standing without the right talent.“Diverse hiring will certainly play a critical role and initiatives need to be implemented quickly if this resourcing gap is to be closed.”For Prime Minister Rishi Sunak’s government, one potentially problematic report on employment was published on Wednesday, which said that almost half of the net jobs growth in England since 2010 had been in London and SE England.Ministers are committed to a ‘levelling up’ policy to benefit employment opportunities in UK’s regions and nations, but the research by the Fabian Society think-tank found chronic low investment in jobs outside the capital and South East.The report cited recent “bullish, optimistic rhetoric about regions outside of London” from ministers, but added: “Behind the scenes, many retain a long-held belief that only London and the South East can generate economic growth and that other regions can only ever be their dependants.”It added that such a view was “profoundly mistaken”, saying: “All regions can create good jobs, as they do in other countries, and that focusing only on London comes at a huge cost to Londoners themselves.”
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