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Higher salaries are not long-term fix for skills shortages

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54% of organisations struggling to recruit say hybrid working models aid attraction and retention

Omni RMS has warned that financial incentives are not a long-term solution to the UK’s skills challenges, this in response to reports from the Office for National Statistics (ONS) which have revealed a 6% increase in average total pay – including bonuses – between June and August this year.

Louise Shaw, Managing Director, Omni RMS commented: “While the ONS has reported a decline in vacancy numbers in September, these levels remain higher than pre-pandemic jobs, which suggests that competition for top talent is still rampant across the country. When recruitment gets tough, it’s easy to look at the financial incentives that can be offered to attract top talent. But on a longer-term basis and with general costs rising across the UK, this isn’t sustainable for all businesses.

“There will certainly be a need for pay rises as the cost-of-living crisis worsens, but for employers and HR teams there’s a range of other tactics that can be implemented to attract and retain top talent. In fact, in our own research with the CIPD we found that 30% of employers who had recruited in the past 12 months indicated that advertising roles as ‘open to flexible working’ is amongst their most effective recruitment method.

“More than half (54%) of organisations who have had recruitment difficulties are offering greater work flexibility to address this, while a further 49% say their use of hybrid/remote working has greatly or somewhat increased amid hiring struggles.

“There is a constant battle for top talent, and it’s important that businesses assess what they can realistically offer candidates and what they can improve upon to retain existing employees. Unrealistic salary inflation is not only unsustainable for employers, but will also have limited success long term, with retention rates likely to drop as financially-driven individuals jump ship to gain further pay increases.”

Vacancy numbers still up on pre-pandemic figures

While vacancy numbers have declined according to the ONS, APSCo agrees that the recruitment is still tough despite this fall.

Tania Bowers, Global Public Policy Director at APSCo commented: “While there’s certainly a slowdown in hiring activity that doesn’t mean that the recruitment struggles the UK has been experiencing have eased. The continued decline noted in unemployment levels alongside vacancy levels which are still up on pre-pandemic numbers, shows that the labour market is still struggling through a shortage of highly skilled individuals.

“The uptick in the number of self-employed workers further supports the idea that there is a shortage of experts across the professional recruitment sector. While this will certainly be aided by the repeal of Off Payroll announced in the Chancellor’s Mini Budget, the full impact of this won’t be felt until Q2 2023 when the legislation itself is repealed.

“Reliance on the contractor market alone won’t be enough to fill the skills void being felt across the UK. Just this week we saw reports of the country facing a ‘brain drain’ of scientists and engineers as Brexit continues to drive highly skilled individuals out of the country over funding concerns.

“The UK’s labour market needs strengthening on a number of levels. Up-skilling the workforce is a long-term solution but it will take time and won’t help resolve the immediate challenges employers are facing. We need a dynamic, flexible workforce that recognises the nuances between self-employed contractors and agency workers on lower wages who require greater legal protection to prevent exploitation. International trade negotiations also need to focus on skills and services as much as products to allow UK firms greater and easier access to globally mobile talent.

“There also needs to be complete co-ordination between education institutes, employers, industry bodies and relevant Government bodies to drive a more sustainable and future-proof skills strategy for the country.”

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