Seismic Shifts – the recent changes to the UK labour market
Across 2020 and 2021, the combined impact of the pandemic, the UK’s exit from the EU, planned legislative change within the contingent labour arena and the rise of remote working options generated unprecedented turmoil within the UK labour market.
As the UK re-opened in the summer of 2021, and the furlough scheme ground to a close in September 2021, employers started to realise the extent to which the events cited above had impacted labour supply.
By Q2 2021, the official vacancy total had surpassed the pre-COVID (Q1 2020) level, since when it has rapidly increased, and continues to run at record levels. Job advertising levels followed suit, as employers were unable to access the talent that they needed. The net result was an acute, ongoing shortage of workers.
- At 1.3 million in Mar-May 2022, UK vacancy numbers were at an all-time high
- Job advertising levels rose to 140% of pre-pandemic (Feb 2020) levels by late 2021 and were
still running at 120%+ in early June 2022
- 15% of all UK businesses – including 36% of enterprises with 10 or more employees – were still
facing a skills shortage in early June 2022.
Resourcing challenge #1: the shifting demographics of non-UK nationals in the workforce
Prior to the pandemic, the UK had become hugely reliant upon the support of non‑UK nationals – to the tune of c.12% of its total workforce. Whilst declining notably across 2020 and 2021, numbers were close to being restored by Q1 2022. What had changed, however, were the underpinning demographics of the non-UK national workforce and the associated recruitment channels and protocols through which they were historically sourced, which left many UK businesses floundering.
Resourcing challenge #2: the loss of tens of thousands of freelancers
The impact of the new protocols for Off-Payroll Working (IR35) in the private sector has been significant, in terms of both the flux and fallout that ensued. Whilst not all of the colossal reduction in self‑employed numbers across 2020 and 2021 will have been attributed to these protocol changes, a large proportion doubtless was.
And by way of further evidence that it was not just the pandemic that was creating massive declines in self-employment. Comparison with EU data for both self and temporary employment highlights other drivers for change afoot in the UK.
Resourcing challenge #3: resourcing within key skills sets has become boundaryless
Prior to the pandemic, around 1% of job ads offered remote work. In June 2022, the proportion of remote job ads varies considerably by sector, topping out at one in six (17%) jobs, or more, in the key Life Sciences and Tech sectors.
The numbers: how contingent labour changed between
early 2020 and early 2022
Source: Pixid analysis of ONS data
Temporary employment was a clear winner over the two-year period, with increases within Fixed-term contract (FTC) and ‘Other’ forms of temporary employment – a category that likely includes Umbrella Employment.
In contrast, self-employment was the clear contingent-labour loser over the two‑year period. Moreover, an analysis of the change, over the two-year period, in industry utilisation, shows that self-employment numbers are lower in every sector – and, in many, they have substantially declined.
A full sectoral and role-by role analysis, by engagement status for calendar years
2019 and 2021, is included within the main report.
With so much unprecedented turmoil occurring over such a relatively short time period, there has never been a greater need for effective management of the contingent labour pool.
The implications: the increased need for speed, accuracy and efficiency
With the overall contingent labour pool in the UK diminishing by 9% (555k) between Q1 2020 and Q1 2022, there is a newly heightened need for organisations to deliver a targeted, swift and professional attraction and recruitment process. Moreover, with the new rules of engagement of ‘Off-Payroll’ workers and a new immigration system, there is, additionally, a heightened need to ensure and maintain compliance in relation to permissions and engagement status.
The rise, and likely permanency, of large volumes of remote working also throws new considerations into the process around how to effectively on-board, manage, maintain compliance amongst and off-board those who a hirer may never physically meet.
When combined, all of the above lead to an increased need for speed, accuracy and efficiency within the contingent labour management process.
An overview of the best practices that assist with enabling organisations to achieve this, including the ways in which Pixid technology can help, is contained within the main report.
