Now you see them, now you don’t! How do nearly a million workers go missing?

A structural economic weakness?

Some politicians asserted that the UK’s Covid vaccination program was a pioneering model that other nations followed to send the virus into retreat. They also claimed that the UK’s economic recovery would be quicker.

However, startling economic data from the UK’s ONS (Office of National Statistics) supports the claim made earlier this year that compared with pre-Covid data, around 1 million people have left the UK job market.

This helps explain the significant skills shortage that is impacting the talent hunt by recruiters in the UK market. Two key data points lay behind the headline number:

• 313,000 fewer people employed
• 629,000 more economically inactive people

There is much debate about the huge number of those economically inactive. Various reasons exist and they point to some problems and these may be indicative of a structural weakness in the UK economy:

• Child and social care costs – some of the inactive have decided to ditch work and care for children, elderly or disabled relatives – it simply makes economic sense to them, given the high cost of care and the shortages of resources in the care sector
• Sickness – the severe backlog in socialised healthcare treatment by the NHS and the effects of long Covid are partly responsible for swelling the ranks of the long-term sick
• Education and training – others that are classed as inactive have chosen to ring the changes and have left work to enter education or retrain for new careers or opportunities

Australia outperforms UK in turning the tide of inactivity

The UK is the poorest performer in the G7 at getting economically inactive people back to work, post-Covid. It also doesn’t look great against developed nations outside of the G7, including Taiwan and Australia.

Australia hasn’t only got more economically inactive people back to work, it’s got more back than pre-Covid – it has actually reversed the trend for inactivity that it saw before the pandemic hit.

The UK looks like it has a structural problem that isn’t going to resolve itself through the action of market forces anytime soon. Increased wage demands only serve to feed inflation, but when talent is in short supply, it​​ is a candidate-led market and ultimately pay and reward packages become pivotal to securing the skills that agency clients need.

That’s OK if agency clients are in a booming sector where growth is strong. However, there are many businesses in some sectors where there is a need to restore profitability before upping the wages, and offering increased salaries poses some challenges.

Maintain your focus on core recruitment issues with ETZ

For recruitment agencies, the market continues to be challenging while offering opportunities. To maintain focus on the core activity, recruitment businesses need access to reliable, best of breed technology.

ETZ’s leading timesheet, invoicing and payment solution, streamlines the back office processing of your recruitment agency. Our complementary solutions, ETZ Comply for onboarding and document management, and Caspian for business intelligence give agencies further capability to streamline and uncover opportunities.

ETZ is the RecTech partner of choice, helping agencies to navigate the pitfalls and obtain excellent value from technology. To find out more, call us on 0800 311 2266 or book a demo.