Recruiters Perfect Storm: Rising Demand Meets Declining Labour Availability
As the UK economy continues to recover from its recent travails, which including Brexit, COVID, the invasion of Ukraine and the cost-of-living crisis, a new problem is appearing fast on the horizon: a shortage of labour.
Whilst still challenging, labour supply over the last couple of years has still been manageable to a certain extent, with demand checked by the struggles mentioned above. COVID lockdowns massively mitigated the early effects of Brexit on the economy and the cost-of-living crisis drove us into slow growth and eventually a recession that dampened demand for workers.
Optimisitc outlook leading to labour shortages
However, with the UK officially now out of recession, a new government and the likelihood of increased investment due to lower inflation, the economy could well be on a course to bounce-back.
And with these optimistic developments, comes the usual ‘peak’ for labour demand which starts in September and continues to early December as Logistics, Retail and FMCG wake up after Summer and gear up for Christmas.
But this strengthening demand is being mirrored by a weakening volume of workers, due to several different factors:
- Reduction of immigration from Europe since Britain left the EU
Net migration of EU citizens has been negative since the pandemic and under the post-Brexit immigration system, with immigration falling by almost 70% compared to its 2016 peak. Source: Migration Observatory, University of Oxford.
- Reduction of immigration from outside Europe caused by changes to Govt. Policy
Official migration data, released just before the General Election, showed that net migration remained at unusually high levels (685,000) in 2023. However, a sharp drop in visa grants early this year and an increase in student emigration hint at the start of a long-expected fall in net migration. Source: Migration Observatory, University of Oxford.
- Increase in UK workers being economically inactive
The number of economically inactive people in January to March 2024 was 755,000 above pre-pandemic levels in January to March 2020. The continued high level of inactivity meant that the UK’s employment rate remained below its pre-pandemic level in Quarter 1 2024. The UK is the only G7 country where this is the case. Source: House of Commons UK Labour Market Statistics.
Converging factors to lead to shortage of workers in key industry sectors
“There is little doubt that peak this year will be the most challenging labour market for many years,” said KPI Recruiting Sales Director Joe Jardine. “The number of converging factors affecting recruitment is unprecedented and it’s creating a perfect storm for recruiters. Even in the Summer, some sectors are already feeling the effects of a shortage of applicants, especially in Driving plus many Industrial, Commercial and Engineering positions. Businesses need to formulate a robust recruitment strategy over the few weeks to avoid becoming a slave to the current labour trends.”
“KPI’s strengths come to the fore when recruitment becomes really tough and clients can no longer rely on traditional attraction methods or mediocre agencies. We partner with some medium-sized players and well-known brands to assist them with year-round recruitment, annual peaks and hard-to-recruit locations.”
If you need advice on a strategy to recruit new workers this Autumn, call KPI’s Sales Director Joe Jardine on 07874 867 453 or email JoeJ@kpir.co.uk.
