No industry can thrive without any form of labor. Unfortunately, the UK seems to be having a problem with that one.
In the 2019–2020 report by Luminate, employers revealed that over 300,000 positions across occupations were hard to fill. Of those that are deemed on the professional level, nearly 110,000 were vacant. Meanwhile, almost 80,000 jobs lacked workers because of a skills shortage.
Some of these jobs can be filled quickly as the UK bounces back from the coronavirus pandemic, and businesses begin to restart or recover.
However, the country may still face a couple of challenges that can affect the labor market. These include Brexit, which may limit the country’s access to more talent.
Labor shortage can potentially increase the overall costs of doing business. In fact, in the construction industry, this problem could raise rates by at least 10 percent.
What can companies do to limit the risk of a labor crisis? Here are a few ideas:
1. Encourage the Top Talent to Stay
In many organizations, professional-level positions, such as managerial, executive, CEO, and supervisory jobs, are the hardest to fill. They are also the costliest if let go.
In a US study, if a manager decides to leave the company for whatever reason, the turnover cost could be equal to as much as 213 percent of the position’s annual salary.
Companies, therefore, can save more money if they encourage their top talent to stay in the organization. They can do that by:
• Providing them opportunities for growth and development.
This isn’t limited to technical skills but also leadership training. In fact, in one of the industry surveys, the lack of career growth ranks second as the primary reason employees leave.
• Increasing the level of engagement among employees.
Employee engagement is a concept that describes a worker’s passion and commitment to the job and the organization. Often, this stems from the idea that they are contributing to the company and that these contributions are valued.
Improving employee engagement can significantly decrease the business’s turnover rate. Moreover, several studies already show that engaged workers work smarter, produce better results, and earn more income. They are also more productive and help the company increase its profitability.
2. Keep the Employees Longer
The pension age in the UK has been increasing over the years. In October 2020, it went up to 66 years old from 65. There are two reasons for this: (1) allow the pension fund to catch up with the possible retirement needs and (2) decrease the severity of the country’s labor shortage.
Probably some good news to businesses, in 2019, a study showed that at least 50 percent of adults might opt to continue working either full-time or part-time even after retirement.
Nevertheless, companies themselves can also promote longevity in the workplace. One of the steps is by helping these individuals increase their retirement income. Firms can explore options like a defined contribution plan in the UK.
In this setup, both the employee and employer contribute to the former’s retirement pot. The money is then invested in different portfolios such as stocks. And because it is tax-deferred, the scheme allows the money to grow fast.
This can help keep the employees longer since the more years they contribute, the more money they can place in the pension fund. This also gives their account more time to grow.
3. Hire More Minorities and Women
Some companies may prevent labor shortage by considering hiring more women and minorities, including immigrants and people with disabilities.
Granted, more women are joining the UK workforce. According to Statista, there was about 72 percent of women holding jobs in 2019. That’s a significant improvement from 65.9 percent in 2000.
However, many businesses can do better by increasing the number of women in the workplace—and paying them well. The 2019 report by the Office for National Statistics cited that the gender pay gap remains at almost 9 percent.
Meanwhile, the foreign-born population in the country almost doubled from 2004 to 2019 due to migration. But many of these immigrants are often overqualified for a lot of UK jobs. Thus, a number ended up doing medium- and low-skilled work.
Lastly, the country has over 14 million people with disabilities, of which 8.4 million are already of working age. However, in 2020, around 400,000 remain unemployed. This was over 75,000 more people than the previous year, according to the House of Commons.
Not all positions are ideal for women, minorities like immigrants, and people with disabilities. Yet many jobs can be modified to make these opportunities open to these demographics.
Retaining one’s workforce helps beat the labor crisis and lowers the cost of hiring new people. But if a business needs reinforcement, it may want to look into demographics not hired as often as the others.