Latest ONS figures indicate UK unemployment at lowest rate since 1974
The latest Labour Market Statistics have been published by the Office for National Statistics this week, and indicate that the war for talent continues despite both the cost-of-living crisis and increasingly grim economic indicators.
Perhaps the headline message of the latest report is the national unemployment rate in the period May to July 2022 decreased by 0.2%. This takes this important measure to its lowest level since July 1974 – almost half a century ago.
In isolation this is an extraordinary figure, particularly as the nation is teetering on the edge of a potentially significant recession. It would usually be expected that the approach of a significant downturn would trigger job losses and increased unemployment. Yet despite The Bank of England recently predicting a 5 quarter recession the UK unemployment rate continues to reduce.
Good and bad
From a national economic perspective this is good news. Bluntly, it is far better to have people in work and contributing to the Treasury via Income Tax and National Insurance than to have them out of work and claiming state benefits.
Yet this statistic cuts both ways. With so few candidates available hard-pressed employers are being forced to grant significant pay rises to retain their existing employees, and pay even more to attract what new talent that is available for hire in such unsettling economic times.
That said, the sad truth is that employers in so many sectors just do not have the cashflow available to make such awards right now. For businesses are also being squeezed by both the inflation and energy cost crisis. As we explored in this June post, employer costs are escalating wildly, and details of the government plan to cap business energy costs are not yet fully available either.
The employer response?
So what can employers do to attract and retain talent given the above challenges?
As we explored in this post last month, retaining and attracting older workers can really help in the currently tight labour market. This grouping represents a significant pool of experience and knowledge, and there is much evidence (including this week’s story from Sky News) of older workers now returning to the workplace following the pandemic.
Yet no forward-looking business can afford to recruit solely from the those aged 50 and above. It follows that employers need to do what they can to retain and attract talent from other age groups too.
Low-cost support options?
If significant pay-rises and one-off payments are off the table because of cost constraints, what else can employers do to help in this respect?
Firstly – and importantly – audit your existing employee benefits offerings to ensure that the benefits offered are relevant, understood, appreciated, and used by your workforce. The reality is that many employee benefits fall into disuse over time, and employers should always seek to maximise the return on their existing benefits spending.
The next step is to see if there are any new – yet low-cost – options that might appeal to employees. In particular seek offerings that might not be available at alternative employers in your local area and/or industry so that your offering stands out as a genuine improvement on the others available.
Benefits such as Group Income Protection plans offer important protections that few families would otherwise have, and can be established for far less cost than most organisations might expect. These policies typically include free-to-use early intervention services to speed the return of an ill employee to the workplace.
Remote GP services are another low-cost winner, which if communicated well is likely to be much appreciated by employees and their families.
Lastly – and certainly not least – seek to support employees in better managing their everyday finances.
The new breed of employee discount schemes provides practical everyday savings at shops and websites that most people use. It should also be noted that some health-related employee benefits offerings also reward workers for simple everyday fitness goals with discount vouchers. Either of these options will send the message that the employer wants to help even in the currently difficult circumstances.
We would also encourage employers to support financial wellbeing sessions. Most workers in the UK have never benefited from any formal education around money matters, and it is also the case that very few employees are old enough to remember the last time inflation was at the levels seen today. It follows that most UK workers have no practical experience as to how to respond to these current economic challenges.
So, some basic – but informative – sessions around the basics of budgeting, spending, debt management, and savings are likely to be extremely useful at this time. Partners& will be launching a range of financial wellbeing support tools in early October, so please contact your usual Partners& consultant if you would like to receive details of our services when available.