Recruitment, Recruitment, Recruitment.
March 28, 2023

Recruitment, Recruitment, Recruitment.

The UK economy is currently in recession. Predictions from KPMG estimate that the UK economy will shrink a further 1.3% next year.  Yet organisations are still reporting talent shortages despite this economic slowdown…leading many to ask what is going on?  Masters in Minds have already discussed the switch from the Great Resignation to the Great Hire; however, continuing low unemployment in a recession is another remarkable development. The novelty of this situation is highlighted by Josh Bersin, who states that ‘for the first time I can remember we’re entering global economic slowdown, yet the unemployment rate has dropped to the lowest it’s been in 53 years.’  

So unfortunately for CEOs, CHRO and everyone in between, recruitment-related problems aren’t going anywhere during this recession.  


The problem?  

Looking at the UK, there were officially 1.3 million unemployed people in December 2022, the lowest since the 1970s. Moreover, ONS reports that the number of job vacancies is still considerably above pre-pandemic levels, although experiencing a slight reduction from the previous quarter.    

This dangerous combination of low unemployment and high job vacancies has caused a headache for business leaders across the country. 78% of organisations across the UK report struggles with recruiting, a historic high trend that continues even with larger UK businesses, with 40% echoing this. A medium-sized professional services firm reported:  

‘We are finding it difficult to recruit all levels of staff. Applicants are able to choose between several employers as we are all chasing the same people.‘   

A struggle I’m sure all business owners recognise.  

The causes  

As with most complex issues, there are a plethora of causes.   

Firstly, there are fewer people, specifically, fewer young people. Birth rates have substantially fallen since records started in 1938. In 2021 there was an average of 10.4 births per 1,000 population compared to 17.5 in 1960. Other countries like Germany are experiencing similar; China’s population is actively shrinking, and the United States population is not growing, illustrating that these low birth rates are a global trend in the developed world. These birth rates, alongside the fact that people are living longer, creates the ageing population problem; a problem exasperated by the pandemic where many Baby Boomers were forced, felt forced or chose to retire early. Mixing that with the fact that many young people decided to extend their higher education careers to avoid entering the job market during Covid-19 has understandably left a dent in the labour market.  

Building upon this, IES experts report that up to a million workers are missing from the UK job market since the pandemic. Although unemployment is falling, employment rates are also significantly lower than pre-pandemic levels because of an increase in the number of people considered ‘economically inactive.’ These people are excluded from unemployment figures and effectively just describes someone who’s both unavailable for work and not looking for a job. Wilson from IES states:  

‘We think there’s a gap of about a million people between what the labor market would have been like without Covid and where it is now.’  

Early retirement, entering or prolonging higher education, long Covid, immunosuppressed vulnerabilities, burnout and fear of Covid-19 all contribute to this gap. However, our society should expect higher economically inactive rates regardless of the pandemic, as despite living longer lives, this doesn’t equate to healthier lives. Since 1960, life expectancy has generally increased by 19 years, yet the time spent in poor/moderate health has remained stable at 50%. Bearing in mind increases in retirement ages, the growth in those economically inactive is likely to continue due to debilitating illnesses and caring responsibilities. Caring responsibilities account for 1.1 million economically inactive people in the 25-49 age category alone, a figure likely to grow.   

Finally, experts estimate that Brexit and pandemic-related visa problems are responsible for a third of the labour shortfall. In lower-skilled sectors, think-tanks found that ending the free movement from the EU is ‘contributing significantly’ to shortages. New research suggests the UK lost an estimated 460,000 EU workers since Brexit whilst only gaining 130,000 non-EU workers. The implications of Brexit, which were worsened by the pandemic and quarantine rules, are primary contributors.  


What can organisations do?  

Whilst all these external factors are out of organisation’s control, business leaders can mitigate the outcomes by changing their approach. Over the past 40 years, a significant economic shift has occurred regarding what’s most valuable. Historically, raw materials were primarily what organisations profited from; now, it’s almost entirely human capital. Generally, employers have not successfully created good and meaningful work that people want to do. This is supported by research conducted by New Qualtrics that demonstrates that only 39% of employees believe their job meets their expectations. Now that there are more jobs than qualified people, employers need to recognise that the power balance has switched and adapt to the new playing field. Moreover, given the issues surrounding the ageing population discussed above, this trend is not going anywhere anytime soon. Mr Wison from IES states:  

‘It’s not necessarily about pay, it’s about offering better terms…Employers haven’t had to do that for a decade.’  

As Josh Bersin reports, employee experience is no longer a nice thing to work on; it’s a business imperative. The quality of labour or work is intimately, perhaps entirely, dependent on your employee’s experience. As well as giving recruitment-related advice, Mr Bershin notes that hiring new people is not the only way to grow an organisation (outside specific sectors).  


Here are Josh Bershin’s four top tips:  


Number 1: Don’t hire people that don’t fit your company’s culture.   

Don’t hire people ahead of revenue just to grow. People don’t become the company; the company becomes the people. Worth considering before hiring.  


Number 2: Focus on organisational design.   

Restructuring an organisation can increase revenue, productivity and profits without hiring anyone. For example, Bosch Power Tools completely redesigned the organisation structure to sell products organised by customer needs, not product lines. This change doubled/tripled their margin and revenue per employee without hiring one person.  


Number 3: Think about what you really offer to employees.    

What’s the true value of joining your organisation? The wage, culture, opportunity to add value, growth and career opportunities? It doesn’t matter which it is, you must communicate it clearly to people. The result? You’ll attract the right people.  


Number 4: Internal mobility & the role of middle management.   

The churn and burn attitude to people does not work in today’s business world, nor does waiting for the perfect candidate. It will take too long and/or cost too much money. Promoting people internally is the way forward. Managers should look at their job as a combination of delivering results and also building the skills/capabilities of their people. By doing so, people can move around within an organisation more efficiently, saving recruitment costs.  


Understanding the depth of the problem is the first step towards solving it. Rising job vacancies and lowering unemployment is a challenging combination. However, Josh Bersin’s top tips are the best place to start. If you need help implementing these tips or even just figuring out which ones are right for your organisation, just call us. Or follow us on LinkedIn to stay in the loop.