The jobs puzzle and the emerging talent crisis
In the UK we all know we should celebrate success more than we do, but perhaps things are changing and the real lasting legacy of the Olympics will be that we start to feel good about what we excel at.
I’ve been puzzled along with most economists about the private sector creating nearly 500,000 new jobs in the last year while the economy has been at best flat and according to official ONS data in a double dip recession. In the quarter to July alone 236,000 new jobs were created. The performance of our labour market continues to be world class, and is the envy of countries across the globe - especially in Europe. The ability of UK businesses to keep a million more people than predicted in work during the toughest of times, keeping their skills fresh and contributing to society should be celebrated; in fact it should be sung from the rooftops.
So how have we achieved this outstanding performance? It seems it’s being driven by a significant shift in both employer and individual behaviour. Businesses have recognised that finding talent in the UK is often a long and expensive process, so rather than let people go only to then have to chase scarce talent when demand comes back employers have hung on to their good people. This is supported by official data which shows productivity has reduced over the last year as employers make a long term trade off and retain their talent.
The other factor at play is the growth in flexible working, part time and self-employment has grown rapidly over the last 18 months. Some of these jobs are what you might predict - front line roles in supermarkets and fast food restaurants - but if you dig a bit deeper another trend is emerges and that is that talent can choose where and how it works.
The growth in freelancing among people who have held senior managerial or professional corporate roles but who now choose to work in a flexible capacity is growing fast. In my network of senior HR practitioners I would say close to 50 percent are not now working in a full time, permanent role. What's driving this trend? When I question these friends firstly they say they are fed up with the corporate slog of commuting, lots of traveling and excessive hours. But they also say it’s a desire to do great productive work while balancing work and home life that's really spurred them to change their working patterns.
These arrangements are attractive to businesses as demand for talent in our knowledge based economy is growing, at the same time as businesses are feeling the pressure to keep costs low; having experienced and highly capable managerial and professionals capability available without the fixed cost, and often at short notice, is highly desirable.
In the medium term with any kind of demand returning to the economy the war for talent will be harder fought than ever before. The trends all point to talent becoming ever more scarce. I am convinced we are going to find ourselves with a two speed labour market. In areas where skills and capabilities are in short supply, the market will be driven by those with talent. But in parallel we have a situation of high levels of unemployment among the low and unskilled and a population of long term unemployed who become more isolated and less likely to work and be hired. Our rapidly aging workforce will only make the talent shortage worse.
Throw into the mix the changing attitudes to work of generations X and Y and a government that continues to intervene unhelpfully and there are some big challenges on the horizon for employers as they think about how they attract and retain the talent they need to maintain their competitive advantage.