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Employers have reported the lowest rate of recruitment and retention difficulties since the 2008 recession; but does this mean that employers have their pick of candidates?

Paydata outlines why challenges still remain for some employers and how nearly half of UK firms are planning a recruitment freeze over the next year.

Labour turnover slows

Organisations report fewer retention and recruitment challenges. 66 per cent anticipated recruitment challenges in spring 2019, but this had markedly dropped to 28 per cent in spring 2020. 25 per cent reported not knowing if they will face recruitment difficulties, underlining the uncertainty this period has brought for both sides of the employer-employee relationship. Similarly, whilst 62 per cent of respondents in spring 2019 expected retention challenges, this significantly dropped to 22 per cent and 28 per cent thought it was too early to tell.

In addition, the figures from our spring 2020 survey compared to last year’s UK Reward Management Survey reveal that labour turnover figures have also been affected. Last year, the median labour turnover figure was 17.9 per cent, which is down to 14 per cent in 2020. Similarly, voluntary labour turnover figures are down from 12.8 per cent to 11 per cent this year. A huge amount of redundancies (particularly for those in the hospitality sector) have already occurred and a climate of uncertainty makes moving companies and roles a less attractive prospect to candidates right now. However, these statistics are a clear sign of the pandemic’s cooling effect on the buoyancy of the labour market over 2020, in spite of the Coronavirus Job Retention Scheme, which is still in operation.

An employer’s market?

Given the large-scale redundancies that have already taken place, many are discussing how this has given employers a choice of candidates in the current climate. However, despite organisations reporting fewer retention and recruitment challenges on the horizon, employers are indicating that finding the right talent is still a huge challenge.

Employers are cautioning the assumption that they are spoilt for choice in light of the key skills that many employers are still struggling to recruit for. While more candidates are applying, few have the right skillset. There may well be more choice for employers seeking to recruit for generic support and administrative roles, but those looking to fill specialist positions may have fewer suitable candidates. They may also be required to pay a premium to recruit during these uncertain times where moving from a secure role may be more of a risk for individuals.

Incentivising retention

By the time that the financial support offered to firms through the Job Retention Scheme is withdrawn, which is currently due on 31 October, job losses may be further exacerbated. Reports over the weekend that Butlins have 1,000 staff furloughed, facing uncertainty around their role, highlights the risks posed to businesses by talk of a second lockdown and the Job Retention scheme coming to an end. Designed to prevent mass redundancies, there will not be a cliff-edge of financial support, as the government will still offer firms:

  • £1,000 for each furloughed employee retained until the end of January
  • £1,500 for every out of work 16-24 year old given a ‘high quality’ six-month work placement
  • £2,000 for every under-25 apprentice taken on until the end of January or £1,500 for over-25s

With Chancellor Rishi Sunack ruling out further extension but being open to ‘creative ideas’, Sir Keir Starmer is urging companies to be more open to part-time working, rewarding employers for giving people more hours instead of cutting jobs and calling for targeted training and support for those in badly affected sectors such as retail and aviation.

The effect on your Employee Value Proposition

As employers face the ongoing uncertainty of restrictions to tackle increasing infection rates across the country, the pressure they face must be balanced with the long-term ramifications of their actions. A reactive strategy that doesn’t place the individual employees at the heart of it risks alienating not only those who are brought back from furlough or made redundant, but affects the morale of those who are retained.

We caution against treating employees callously even in the trying circumstances that many organisations currently face. Sought-after candidates can easily move and have good memories. Now is the time to ensure you are acting as fairly and objectively as possible – it will pay dividends to your employer brand in the months and years to come.

Valuing people in uncertain times

Employee opinion surveys topped the list of priorities for 69 per cent of respondents to our 2020 spring survey, demonstrating the value of actively listening and addressing employee concerns during a critical period. Being responsive lays the foundations of a fair culture. Pay benchmarking and reviewing the pay review process were the second highest priority, demonstrating the importance to employers in remaining competitive and retaining key skills.

Communication tools are crucial in driving employee engagement by strengthening the level of trust between employers and their employees. Employers are telling us that crisis communications were excellent as the situation unfolded, often being led by the CEO to explain the decisions and approach of the organisation as it responded to the new restrictions. The challenge will lie in maintaining this momentum to keep engagement levels high. Where pay is frozen (for 12 per cent of our spring survey respondents) or constrained, Total Reward Statements can also help to demonstrate the investment employers are placing in employees – both tangible (e.g. pay, bonus and cash benefits) and intangible (e.g. learning and development opportunities and holiday entitlement). This level of transparency can be crucial to employee satisfaction.

Get in touch

Contact us to discuss how we can help to underline the value you offer to employees at a time of constrained pay. We also welcome your views on how you are driving employee engagement and the ongoing impact of measures introduced to tackle the pandemic in our UK Reward Management Survey, which is open now.


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