It’s perhaps an understatement to say that the UK has been through significant upheaval so far this year. Businesses across the country have faced reduced workforce productivity, a change in Government and a struggling economy. Underpinning many of these challenges for firms, though, are the significant skills shortages that are showing no sign of easing, at least not to the extent that many would hope.
Almost every sector is facing a dearth of talent across the country, with those that rely heavily on STEM talent the hardest hit. Businesses and Government representatives alike have recognised this and we’re seeing concerted efforts to tackle the skills shortages on a longer-term basis. However, adding to this issue is the growth in jobseeker confidence that is making waves in the labour market.
Historically, companies could expect to see recruitment and retention pressures ease in tough economic climates, with hiring needs often falling and fewer individuals willing to risk a job move during any uncertainty. This latest economic blip, however, has been entirely different, largely due to the unexpected circumstances in the lead up to it.
The large-scale job moves and huge hiring spike we noted in the immediate months of the global pandemic depleted the talent funnel. That meant that skills gaps were exacerbated, and we haven’t yet recovered from this. The workforce, however, certainly has. In fact, we are now in the unexpected situation whereby staff are showing above average levels of optimism in their job and career prospects, and it’s impacting employers’ ability to recruit.
In order to track and monitor trends such as this in the market, we launched the Robert Half Jobs Confidence Index (JCI) last year in conjunction with the Centre for economics and business research (Cebr). Since its inaugural edition we have seen the job confidence benchmark consistently grow. In the latest iteration of the report, the JCI had risen to 51.6, up 5.3 points quarter on quarter by the middle of this year. For context, ‘normal’ confidence levels are those ranked between -30 and 30.
Each quarter we see different factors influencing this optimism from the workforce. In the most recent report, it was the pay confidence pillar which showed the greatest spike quarter on quarter – gaining 23.1 points during this time. This was driven by improvements in both pay gaps and earnings security.
Of more significant note, though, is the stable climb in the job security pillar of the JCI, which showed the second highest reading on record. If we look into this in more detail, our study revealed that almost two thirds (61.4%) of workers expressed confidence in their job security over the next six months. This is the highest level recorded since the first quarter of 2023.
But what does this mean for businesses? In essence, it highlights a labour market that is only becoming more difficult to navigate. With firms facing increasingly tight budgets and a workforce of professionals who are not only more acutely aware of the demand for their skills, but also more confident in the career prospects, the ability to attract and retain core talent without breaking budgets is at risk.
That doesn’t mean that it’s all doom and gloom, though. In fact, savvy employers will already be looking at other methods of hiring and keeping core talent. A prime opportunity lies in tailored benefits packages. Our annual Salary Guides have consistently shown a desire from the workforce to have access to better perks that are broadly aligned with the macroeconomic climate. This year, for example, there has been increased demand for benefits such as dental insurance and financial allowances for remote working as staff tackle both the rising costs of living and the crisis in the health service.
There’s a prime opportunity for employers to capitalise on this to create a more well-rounded and robust benefits package to boost hiring and retention. The core to success in this, though, lies in not only creating something that is relevant to each individual, but also ensuring this is communicated well.
In our latest Jobs Confidence Index, we asked workers for their views on the impact that the New Deal for Working People will have on them, however what was more of an unexpected stand out result was the number of people who simply didn’t know what they already had access to. On average, over a third of employees (36%) were not sure if aspects of the ‘New Deal’ were already offered, including 40.2% who didn’t know if there was a menopause action plan and 39.1% who didn’t know if there were published gender pay gap figures.
If firms are to look at alternatives to pay rises in order to tackle the tough labour market, they have to ensure they are communicating this to internal and external audiences, otherwise efforts will be wasted, which, as our research suggests, is already happening for far too many.
Chris Lawton, Vice President of Permanent Placements UK & Ireland at Robert Half
