What changes and challenges are in store for the workplace, the nature of work, and the workforce of tomorrow?
The world of work is changing. Technology, globalisation, demographics, social values, and the changing personal expectations of the workforce are all impacting on the recruitment landscape, disrupting business models and radically changing who, where, when, and how work is done.
Skills shortages
With levels of job vacancies at record highs and unemployment at record lows, it is no wonder that retail and hospitality businesses have been struggling to find workers. This labour shortage has resulted, for example, in pubs and restaurants remaining closed and significant supply chain issues. Skills shortages are stifling growth and contributing to the recession facing the UK which is likely to worsen in 2023.
The reasons for the skills shortage are complex. Many businesses were unprepared for a post-pandemic surge in demand which saw job vacancies rise rapidly. The end of free movement and the UK government’s restrictive approach to migration post-Brexit has hampered workers’ ability to enter the UK to fill vacancies. Innovation is also playing a part, with technology developing at an unprecedented pace meaning that available workers often don’t have the necessary skills for the jobs of today never mind tomorrow.
The numbers of people not in employment or seeking employment (the economically inactive) have increased significantly since before the pandemic. Some of this increase is due to the so-called Great Resignation which saw many reassess their life choices and many over 50s choosing to retire early. But in large part, this increase is due to a rise in the long-term sick, partly driven by Long Covid (of which there are over two million sufferers, according to the Office of National Statistics) and delays for investigation and treatment under the NHS. Declining fertility rates together with increased numbers entering tertiary education mean not enough young people are entering the workforce to fill available vacancies.
Mitigating skills shortages
- Looking outside traditional recruitment pools both demographically and geographically
- Overhaul recruitment practices to focus on a candidate’s potential rather than their experience and qualifications by using predictive recruitment and skills-based assessments
- Moving organisation strategy from job to skills based – increasing focus on training and developing its people
Trapped skills value
As work becomes far more changeable, grouping all that people do into a ’job‘ means that there are untapped skills and capabilities in our people, leading to trapped value.
Only 18% of executives strongly agree that their workforce is using their skills and capabilities to their fullest potential, and fewer than half of executives report that they can quickly and easily move skills to where they are needed most as work evolves.
Deloitte Insights
Skills shortages – migration
According to the British Retail Consortium, there were 100,000 vacancies in the retail sector in the three months to August 2022, with logistics workers continuing to be in particularly short supply. In hospitality, shortages of restaurant and hotel workers are limiting the sector’s ability to manage bookings, particularly at peak seasonal times.
Undoubtedly, recessionary economic conditions in the UK over the short to medium-term will undermine consumer confidence. However, inbound migration will still have a role to play in assisting luxury retail and hospitality brands to trade successfully.
Vacancies at lower-skilled levels may not be eligible for sponsorship or it may not be commercially viable to fill these using visa routes. Shortages may also partly be resolved through lower recruitment needs and more available workers. However, management-level front-of-house hospitality and retail positions may still justify the cost of sponsorship.
There is also a necessity to meet the evolving needs of younger, more tech-savvy and eco-conscious luxury brand consumers who are looking for investment purchases and exclusive experiences post-pandemic, as well as an appetite to offer internship opportunities to the next generation of creatives.
Our expectation is that demand for Skilled Worker sponsorship is likely to continue for strategic management, marketing and tech roles, and those requiring skilled artisans and creatives. Internships will also continue, perhaps at lower volumes, under the Government Authorised Exchange route.
Supinder Singh, Partner Immigration – Lewis Silkin
Cost of living crisis and work
The UK is forecast to experience the longest recession in a century as the economy contracts over the next two years. Coupled with this, the UK is experiencing the highest inflation rate in over forty years caused primarily by surging energy and commodity costs arising out of Russia’s invasion of Ukraine. Higher interest rates, taxes and reduced public spending have followed and will increasingly put pressure on consumers and businesses alike. The retail workforce tends to be at the lower end of the pay scale so these employees will be particularly affected.
Many businesses will struggle. Some will respond by cutting staffing levels. In some cases, businesses will go under. However, many employers that can are looking at the steps they can take to help their people. Several are offering one off bonus payments to mitigate the cost-of-living pressures faced by staff. Others are providing support and counselling for those facing financial or other difficulties and loosening rules on taking on second jobs.
In a Chartered Management Institute (CMI) survey of more than 1,000 managers and team leaders, 71% said they had seen evidence of the crisis increasing stress and anxiety for their teams.
Evolving demands of employees
Studies such as the Deloitte Global 2022 Gen Z & Millennial Survey into the priorities of employees and job seekers in deciding what work to do and who to work for consistently find that workers, especially the younger generations place significant importance on: flexibility (including home or hybrid working); autonomy (control over their work and the exercise of their flexibility); a sense of purpose from their work; and a sense of belonging. Pay is also an important factor alongside transparency and fairness, particularly in light of heightened inflation and interest rates increasing costs.
Employee leverage has increased during this time of acute labour shortages and employers have little option but to respond in order to attract, retain and motivate the best people.
However, according to recent ONS data, only around 40% of the workforce can benefit from the increased flexibility and autonomy home and hybrid working offer. This group often reflects those with in-demand skills and the strongest negotiating position. For many others, including the majority of those working in retail and hospitality, making ends meet and benefitting from work with dignity remain the primary focus.
Employee values and employer brands
Brand activism, where a brand looks to have an effect on social, economic or environmental issues, has been on the rise in recent years. For employers, this strategy can have a positive effect on attracting, motivating and retaining staff. Employees, and in particular the younger generations, increasingly expect their employer’s values to align with their own and expect the company for which they work to take a position on wider societal issues.
Shifting values can, however, give rise to conflict and division. This is particularly visible in the US where a succession of companies have taken a stance on issues such as the Black Lives Matter movement, gun control and, more recently, reproductive rights. Conflicting values and beliefs in the workplace reflect divisions in society more generally and the increasing intolerance shown to others’ views. Some businesses have experienced a backlash when taking a public stance on societal issues with allegations that they represent ’woke capitalism‘. For example, the dispute between Florida Governor Ron DeSantis and the Walt Disney Company “marked a sharp escalation in the rising levels of anti-big-business fervor in the Republican fight to take on “woke” corporations – USA Today
Employers in the UK will increasingly need to navigate these challenges as these issues cross the Atlantic.
The urgency to take steps to combat climate change is becoming ever clearer. As Millennials and Gen Z supplant in the workforce Baby Boomers and Generation X and, even though it’s a few years away yet, as Gen Alpha enters the workforce, the values and priorities of these generations will become an even more significant driver of change to which organisations will need to respond.
The power of employer brands
Employer brand is central to an organisation’s reputation among future and current employees and can offer a clear competitive advantage in a challenging recruitment and retention landscape.
It is the perception of what it is like to work at your company; it is the entirety of your employment experience. Having a strategy to influence, control and change your employer brand – if needed – will give you the ability to create a reputation that attracts (and keeps) top talent.
Forbes
According to Glassdoor, 92% of employees would consider changing jobs with no salary increase if the opportunity was with a company that had an excellent reputation.
Climate change and work
The last twelve months has seen a succession of extreme climate events including record temperatures from the UK and Europe to India to the polar regions; unprecedented flooding from southern Africa to Pakistan; and cyclones and hurricanes of unparalleled magnitude in Japan, the US and the Philippines. Recognition of the need to take urgent action is growing and this will impact more and more on the world of work.
For employers, changing climates will often mean reviewing where products are grown or manufactured and whether employees are working in safe and healthy workplaces.
Organisations will also need to develop plans for reducing their contribution to global warming, not only as part of a responsible business and ESG strategy, but also to respond to stakeholder pressure; whether to attract, retain and motivate the best people; from customers or clients; from investors; or from regulators.
Travel policies, supply chains and workplace energy consumption will all come under greater scrutiny. In the years ahead, workforces will benefit from much greater consultation on the environmental impact of the organisation for which they work.
Sustainability priorities will limit corporate travel’s growth; 3 in 10 companies expect their green initiatives to reduce 2025 spend by 11%-25%.
Deloitte Corporate Travel Survey 2022
Want to join The Collective, and contribute to the debate?
Email us at: The.Collective@lewissilkin.com