Staff shortages put job seekers in driving seat!

It is a paradox few economists expected to see in the middle of the most significant period of economic disruption since the Second World War: a jobs boom. But then economists miss a lot of things.

Up and down the country, more and more vacancies keep appearing – stretching from a shortage of lorry drivers and manufacturing workers, to bartenders and waiters. Many of these opportunities are coming at a time when social restrictions remain and there are mutterings that the Indian (Delta) variant poses a threat of local lockdowns.

It is against this backdrop that a sea change is under way in the labour market. On Friday 21 May, over 18,297 jobs were posted to – the highest daily number I can recall in years – taking the total number of vacancies on the site to well over 240,000. In fact in May we received more new jobs than in any month since February 2008.

Job opportunities are swelling in regions previously hit hard by the pandemic. London, for instance, experienced an 18 per cent increase in job numbers in May compared to April and had the largest volume of postings across all regions, with 57,100 jobs added.

This surge contrasts with last year’s reports of jobs receiving thousands of applicants and suggests that the labour market is shifting from a buyer’s to a seller’s market.

By this, I mean the tables have turned: skilled workers now hold all the cards and can demand a higher price which, in turn, will require businesses to work harder to secure talent.

One obvious way businesses can do this is by raising their wages – and the best way to do this is by increasing productivity so that they can pay people more. These will be the companies that win in the new economy.

Given the current economic climate, employers will be pleased to learn that there are many cost-effective ways they can find new hires and make themselves more attractive – whether that is finding an agency partner or going online.

Firms must employ good recruitment practices, such as giving applicants quick responses and detailed feedback, and including information about salaries, benefits and work perks in job postings. Equally employers must avoid bad recruitment practices, such as setting inordinate tasks and requiring substantial experience for entry-level roles. These are unacceptable in any jobs market.

The switch to a seller’s market is likely to last for a significant period and many companies will struggle to attract workers. Businesses will need as many boots on the ground as possible to take advantage of what is expected to be the fastest period of economic growth in living memory.

Companies must improve interview processes, think creatively about ways they can attract and retain top talent, and look further afield for alternative candidates.

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