We examine the effects on employment law and immigration policy as well as the resulting considerations
The Resourcing and Talent Planning 2017 survey has revealed that in light of Brexit, organisations are placing greater emphasis on developing existing staff, increasing communications and opportunities to listen to employees, and also exercising more caution in recruiting. Firms expect that the biggest changes in the next three years will be tougher competition for well-qualified talent, development of existing staff, and the increasing difficulty in recruiting senior and skilled employees. Organisations must therefore remain alert to the potential changes and be agile in their responses to be able to continue attracting and retaining people with the best skills and potential for their needs.
Meanwhile, the Spring 2017 Labour Market Outlook has highlighted a strong, continuing demand for labour against a backdrop of diminishing supply, consistent with the trend noted in our previous LMO report. The reduction in the number of non-UK EU nationals in employment in the UK is a significant factor in this, and if the gap is going to continue or worsen as the Brexit process continues, it will be essential for organisations to invest in building the skills they need and improving their talent pipeline for the future.
Impact on recruitment
The uncertainty caused by the UK’s decision to leave the EU is already being felt on the ground by recruitment and talent professionals. The Resourcing and Talent Planning survey reports around a fifth noticing an increased cautiousness in prospective candidates and around the same proportion seeing evidence of an increased cautiousness in organisations’ recruitment. Three-fifths of organisations also anticipate that as a result of the Brexit vote, they will in the next three years experience increased difficulty in recruiting senior and skilled/ technical employees, while two-fifths anticipate increased difficulty in recruiting operational staff.
When it comes to employing migrants, the survey shows that despite the Brexit decision, the proportion of organisations anticipating that they will recruit EU migrants in 2017 is similar to the proportion doing so in 2016, across all sectors.
How prevalent are hard-to-fill vacancies?
The Spring Labour Market Outlook survey data indicates that the labour market is currently unable to meet some employers’ requirements in relation to labour demand; this is perhaps no surprise given the underlying trend in unemployment, which has recently hit a 42-year low.
A small majority (56%) of employers report that they are currently having difficulty filling vacancies in their organisation; this is up from four in ten (40%) employers in the Autumn 2015 LMO report. And around half of all vacancies (51%) are proving hard-to-fill among those organisations that are experiencing recruitment difficulties. The density of recruitment difficulties is greater among small establishments (63%) that have hard-to-fill vacancies than larger employers (46%).
Where employers struggle to fill their vacancies, it seems that a lack of skills, qualifications or experience amongst applicants is the main reason for their recruitment difficulties. Around six in ten hard-to-fill vacancies were reported to be skills-shortage vacancies compared with the four in ten reported in the Autumn 2015 report. However, the experience of skills-shortage vacancies varies greatly by sector.
Meanwhile, around four in ten vacancies were difficult to fill for non-skill-related reasons. Such reasons principally include a lack of applicants for the role, issues with applicants’ attitude, personality or motivation, or specific issues related to the job role (e.g. poor terms and conditions or unsociable hours) or the recruiting organisation (e.g. remote location or poor transport links).
Addressing recruitment difficulties
The 2017 Resource and Talent Planning survey says that organisations are now most likely to reduce recruitment difficulties by upskilling existing employees to fill hard-to-recruit-for positions.
This marks a change from the previous survey, which saw sponsoring relevant professional qualifications as the most popular choice. This has now been pushed down to second place, followed by recruiting candidates from a different sector and a different industry.
Many of the approaches used to address recruitment difficulties, including developing apprenticeship schemes, sponsoring relevant professional qualifications, partnering with other organisations, recruiting from overseas, targeting passive candidates and recruiting candidates from a different industry, are more common in larger organisations.
For more, see the case study on overcoming skill shortages in healthcare on p 36 of the Resource and Talent Planning 2017 survey.
Increased competition for talent
The Resource and Talent Planning survey says that organisations are most likely to strongly agree or agree that competition for well-qualified talent has increased over the past year (82%). With heightening competition expected to continue, the survey findings point to a widespread focus on improving the employer brand. Organisations recognise that values are increasingly important to candidates and employees alike and that they should be at the heart of their brands. Most organisations focusing on improving their employer brand have improved their corporate website, recognising that this is often the first point of contact with potential candidates and a highly effective recruitment channel. Almost half have also improved their candidate experience. This is particularly important given the lasting impression a poor candidate experience can create and the fact that candidates are often also consumers. With the increased popularity of and transparency provided by platforms such as Glassdoor, one negative experience can be substantially amplified.
Is Brexit driving UK organisations to relocate jobs overseas?
According to the latest Labour Market Outlook findings, just over one in ten (12%) private sector firms say that the UK’s decision to leave the European Union has led them to consider relocation of some or all of their business operations abroad. Popular relocation destinations among those firms that report they are considering moving their operations overseas include the Republic of Ireland (18%), Germany (15%) and France (13%). Almost a quarter (24%) say they will move or are considering moving operations to a country outside of the European Union. Additionally, around a third of firms (32%) that plan to relocate some or all of their operations don’t know where business activity will be re-directed.
Investment in skills and training
Approximately three-quarters (73%) of LMO employers have a dedicated training budget, up from 70% in the Autumn 2015 LMO report; although it is somewhat surprising that the share of organisations has not increased more given the underlying trend in unemployment. Consistent with previous reports, the existence of training budgets is higher in the public sector (94%) than in the private (66%) and voluntary (86%) sectors.
It is also surprising that almost one in five employers (18%) that have recruitment difficulties do not have a training budget. This indicates that there is more that some employers could do to address skill gaps and reduce labour turnover to help ease recruitment difficulties.
Looking ahead, almost a quarter (24%) of employers expect training expenditure to increase in the next year, but the majority (53%) expect it to stay the same. Meanwhile, 16% anticipate the amount will decrease.
The survey data also indicates that employers are seeking myriad ways of meeting their skills’ requirements and increasing labour supply, especially in relation to younger applicants. Over half (53%) of employers say their organisation is upskilling their existing workforce in order to improve their future talent pipeline. At the same time, almost two in five (38%) employers are offering apprenticeships, while around one in five (21%) employers report that they are investing in the organisation’s brand to attract a broader or younger set of applicants. More than half (54%) of public sector employers offer apprenticeships compared with just over a third (35%) of private sector establishments and just under a third (31%) of voluntary sector organisations.
Other popular workforce development activities employed by organisations include work experience schemes (21%), work placements (19%) and developing a closer relationship with the local school or college (18%).
CIPD CEO Peter Cheese, regional and international chiefs at the CIPD, business leaders and commentators provide their views on Brexit
In the context of change and uncertainty, it is vital for organisations to support and communicate effectively with their workforce and help build resilience