With demand for workers outstripping supply and The Great Resignation showing no signs of abating, ISE researcher Nicola Thomas considers the solutions to the current recruitment challenges.

The latest stats from the ONS paint a clear picture of a demand for workers that outpaces the labour force for the first time in almost 50 years.  

This is echoed in the early careers’ labour market with ISE data showing apprentice and graduate vacancies now higher than pre-pandemic levels.

The implications of this are clear, salaries in some sectors are growing at the fastest pace in 20 years. A positive consequence is that long-term youth employment is at its lowest ever, with workers previously excluded from the labour market securing employment.

These statistics deliver an urgent call to action for business leaders. Instead of worrying about a shrinking UK workforce, employers should consider how to attract workers who have previously been excluded from employment, those who are disabled, older people and people in ethnic minority groups.

No matter what, among the recruitment challenges of 2022, there is a Brexit-sized elephant in the labour market, with a reduction in migration to the UK and a trend towards European workers leaving the UK labour market through the pandemic, the knock-on impact is a tightening labour market that makes it harder to secure talent, and drives up wages.

Retention challenges

Graduate turnover during the pandemic has climbed to the highest level since ISE started collecting the data in 2011.

Watching retention challenges are like watching dominos fall on top of each other. The first domino is cost of living, people need more money to live in the way they are used to. The second domino is lifestyle, if companies are requiring employees to return to the office and they don’t want to, they will look for different roles. The third domino is self-awareness. This is less talked about, but absolutely essential in understanding why employees are moving roles at the rate they are.

Throughout the pandemic there has been a cultural reckoning with people connecting more to their own values and realising that their current job is not in line with their values or life goals. Simply, beyond a pay check, it isn’t enriching them.

Our research also showed a 24% increase from 2021 in employees moving to a different type of work or career. This highlights that companies need to be agile and open minded, reviewing salaries, being flexible with where and how employees work, and above all ensuring their company culture is one of adaptation and progression.

If an employee wants to move, how can you work with them to try a secondment in the company or prioritise their development to craft their role into something that aligns more with their values?”

What do employees want?

When considering solutions to recruitment challenges it’s important to consider what workers want.

With greater choice and increased opportunity to select a role that meets their expectations, employees are seeking work that delivers the lifestyle they want. This often looks like increased flexibility in where and where they work.

Employees have experienced increased ownership of their time through the pandemic, and with increasing cost of fuel, transport and food, the choice to work from home is becoming a key issue for employees with greater demand for remote and hybrid roles.

It goes without saying that employees are seeking salaries that are keeping up with inflation. Our data shows that more young people are citing dissatisfaction with pay as a reason for moving on, increasing to 40% in 2022 compared to 28% in 2021.

If companies are not reviewing salary and remunerating their staff in line with inflation, they will begin to lose staff to competitors as their employer’s experience a greater loss of purchasing power with every passing month.

How employers are tackling the lack of candidates

There is innovation in attraction and recruitment strategies. Lloyd’s uses virtual reality assessments, McDonald’s uses “Snaplications” (applications on snapchat) and Unilever uses psychometric games. Yet some of the most innovative and forward thinking companies are understanding how school and college leavers can plug their talent gaps.

ISE’s Student Development Report 2022 showed an increasing shift away from graduate hiring and towards school and college leavers as companies seek to diversify their hiring practices in the face of a skills shortage.

Our research also showed that in 2022 companies on average spend 47% of their apprenticeship levy, compared to 33% in 2019. This shows that big organisations are increasingly turning attention to attracting and developing school and college leavers. And it’s paying off, with 64% of school and college leavers still remaining with their employer after five years.

This strategy signals a shift in the labour market, with innovative companies thinking about talent shortages in the long run, and understanding that because you can train technical skills, apprenticeships increasingly make sense.

Read more advice and insight from Nicola Thomas