UK labour shortage and inflation put the focus on employersAs pay rises fail to keep pace with inflation, a labour market expert says companies should focus on “better use of existing benefits”.
The first quarterly decline in job vacancies in two years suggests a slowing labour market in the UK, where unemployment remains near historic lows while inflation-adjusted earnings continue to drop.
The latest official Labour Force Survey (LFS) shows unemployment at 3.8% for the period of April to June.
Jonathan Boys, labour market economist for the Chartered Institute of Personnel and Development (CIPD), responded to the LFS data, stating that current inflation figures alongside a fall in the rate of regular pay growth will have severe financial impacts on employees. Inflation is projected to rise further later in the year, and CIPD data shows that just 18% of organisations have a financial wellbeing policy.
"Employers have an important role to play in alleviating the cost of living crisis for their staff," Boys said in a news release. He also said that CIPD research has found that employees working in a company with a financial wellbeing policy are more likely to feel in control of their finances.
Boys said that "better use of existing benefits can make people better off. Certain fringe benefits can offset household costs like housing, travel, and childcare."
Data from KPMG shows a rising number of employees considering job changes specifically because of the higher cost of living. A survey in June of 1,500 UK workers shows interest in financial services positions — with 58% considering a career in the sector because of the expectation of high salary and bonus opportunities.
However, 42% of financial services workers are looking to change careers within the year, with 30% citing the desire for an improved salary and benefits package, 23% seeking a career with more job security, and 20% hoping for a role with more flexibility and remote working accommodations.
The UK labour shortage can affect the broader economy adversely, according to research published in July by the Recruitment and Employment Confederation (REC). "With a 10% surge in demand for staff across the economy, and the labour market restricted by shortages, we could see a 1.2% fall in expected GDP and productivity by 2027 — costing the economy anywhere between £30 billion and £39 billion every year," the REC's chief executive, Neil Carberry, said in a statement that introduced the research.
Almost half of UK companies say they have hard-to-fill vacancies, according to CIPD's summer Labour Market Outlook. The most popular response by organisations to the hiring difficulties is upskilling.
Companies of all types that continue to face staff attrition should look outside their current recruitment practices. Karim Haji, Head of Financial Services at KPMG UK, noted that financial services firms should expand their search for new hires.
"In the competition for talent, financial services firms should consider extending the scope of their search to include nontraditional pools of talent, which can help boost diversity and inclusion."
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.