Employers facing shrinking supply of low-skilled labour

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While an influx of non-EU citizens has kept the supply of medium- and high-skilled labour in good shape, low-skilled labour shortage remains a concern

Employers are facing a shrinking supply of low-skilled labour in the UK, according to the CIPD and Adecco.

The latest Labour Market Outlook, which surveyed 2,104 HR professionals and senior decision-makers in June 2019, found that the number of applicants for low-skilled roles has fallen over the last two years, with employers receiving a median of 16 applicants for the last low-skilled job vacancy they tried to fill. This compared with a median of 20 applicants in the summer 2018 report and 24 applicants in the summer 2017 report.

This decline may be partly due to the continued fall in EU net migration since the Brexit referendum, researchers said.

In contrast, the supply of medium- and high-skilled applicants has held up relatively well. The median number of applications for medium-skilled jobs remains unchanged from a year ago at 10 applications, while employers received a median of five applications for the last high-skilled vacancy, compared with six applications in the summer 2018 report.

The growth in non-EU workers coming to the UK is behind this stability in labour supply for medium- and high-skilled jobs, researchers said. The number of non-EU citizens in the UK workforce increased by 123,000 between the first quarter of 2018 and first quarter of 2019, the majority of whom will have been subject to a skills threshold. This compares with a decrease of 6,000 non-EU citizens in employment in the UK between March 2017 and March 2018.

The growth in non-EU labour in the last year has been mainly driven by the buoyant recruitment of nurses and medical practitioners, following the move back in June 2018 to exempt doctors and nurses from the government’s migration cap, the report noted.

The survey also found that the overall fall in the number of applicants for job vacancies is putting upward pay pressure on some employers. Median basic pay expectations in the private sector increased from 2% to 2.5% in the last three months, while this rose from 1% to 1.5% in the public sector. Overall, average basic pay expectations remained steady at 2%.

Despite the political challenges, Gerwyn Davies, senior labour market adviser for the CIPD, said that employers are expected to take a "business as usual approach" to recruitment and retention.

“Amidst the current political uncertainty, the UK labour market is holding up surprisingly well. Labour demand remains strong, and the robust supply of non-EU workers has helped many employers meet this demand; partly owing to the government’s decision to remove the migration cap for doctors and nurses,” he said.

“This has been key to freeing up visa capacity for employers in other sectors who have sensibly been able to resolve skill shortages by hiring non-EU migrants. Looking ahead, the government’s post-Brexit immigration policy must demonstrate similar levels of flexibility to ensure that such shortage occupations benefit from a more generous minimum salary threshold.”

However, supply of low-skilled labour continues to be a concern, he added: “However, the alarm bell is sounding for employers trying to fill low-skill roles, many of whom are still in wait and see mode. It’s essential that those employers are prepared for reduced numbers of candidates and further restrictions to low-skill labour planned from 2021 with a workforce plan.”

Alex Fleming, country head and president of staffing and solutions at the Adecco Group UK and Ireland, said that organisations must invest in and grow their own talent as a priority.

“In our tightening labour market, ensuring businesses have the right supply of talent isn’t a new issue and during these uncertain times the ‘grow your own’ mentality has become more important than ever for organisations. Workforce planning comes into play again as organisations need to be constantly looking forward and anticipating their future needs and training their own talent accordingly,” he said.

Planning ahead for workforce strategies is a long-term solution that now needs to be addressed more urgently than ever so the labour market can thrive with the right talent in place.”

Fleming added that employers should consider broadening their search for talent: “Conversely, in the shorter-term, imaginative recruitment strategies are also needed to find the right kind of skillsets to bring into organisations, for example unlocking hidden pools of talent can hold considerable value for employers and should be seriously considered as an important source.”

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