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Why we are facing a job rich and candidate short market?

Recruitment for all organisations is ever changing and constantly challenging and it’s not getting any easier either. Although the UK has faced major political upheaval over the last eighteen months, the economy has remained strong with good signs of growth and increasing levels of employment. As businesses grow so does their need to source, secure and retain the very best talent, with the minimum amount of effort or time spent doing so. As a result of this increased demand, there is a clear ‘job rich’ and ‘candidate short’ market in most sectors especially engineering, IT, manufacturing and the service industries.

So why is there a shortage of suitable candidates? Well, it’s not one specific factor causing the shortage; there are a number of reasons.

Whilst it might be seven years since the Great Recession came to an end, there are still impacts being felt from the fallout of the financial crisis. In many sectors, the talent shortages being felt can be traced back to times when companies were too busy trying to stay in business to invest in training, career development or succession planning. As a result, during a time of economic growth and increased business confidence, there is a shortage of suitable candidates with the right skills, technical knowledge or experience. This is being felt particularly in the engineering and construction sectors.

Although the UK has the lowest unemployment rate since 2005, people who are already in work are becoming more hesitant about moving jobs amid Brexit uncertainty. Whilst this has had a clear impact on availability of suitable talent, when coupled with the weakened pound and lack of clarity about future immigration rules post Brexit, there has been a significant fall in the number of EU nationals taking up roles in the UK. The Office for National Statistics reported the number of EU workers fell by 50,000 to 2.3 million in the final three months of last year; the biggest drop in five years. This trend looks likely to continue with a recent survey by the CIPD finding that almost one in three employers said that EU nationals were looking to leave their organisation as a direct result of Brexit. Sectors that have historically relied on foreign labour to fill roles have been hardest hit, including the public sector, education and the healthcare sectors.

The ability to attract and retain millennial talent, the so called ‘Generation X’ is also having an impact. The millennial generation, born between 1980 and 2000 are now entering the employment market in vast numbers, and with soon outnumber their Generation X predecessors. Indeed, by 2020 millennials will form 50% of the global workforce. Their experience of the global economic crisis has seen them prioritising job security, resulting in a reluctance to change jobs. A recent study₁, conducted by the Resolution Foundation, found that only a quarter (25 per cent) of workers born in the mid-1980s moved jobs from year-to-year when they were in their mid-20s, half the rate of those who were born a decade earlier in the mid-1970s.

Some of the complaints about skill shortages can be attributed to the fact that employers can't get candidates to move jobs at the wages offered. Although we have record employment rates, wages in Britain have in fact dropped in real terms for the first time in almost three years as employers remain reluctant to offer bigger pay rises in spite of the acceleration of inflation. This again has reduced the pool of available candidates.

What is very clear in the current market the fight for talent is becoming increasingly complex and competitive. With half (51 per cent) of employers anticipating a shortage of candidates to fill permanent jobs, according to a recent report by the Recruitment & Employment Confederation (REC), quality recruitment remains the key to quality hires. Even though the candidate shortage provides a barrier to sourcing top talent, a multi-faceted approach to recruitment remains the most effective method of filling vacancies.