Looking at our data for the end of the first half of 2023, the standout revelation is that while job vacancies were down marginally in June compared to May (a fall of 2%), this was accompanied by a far more significant fall (-30%) in applications. These numbers clearly accentuate the current dearth of talent in the UK as organizations struggle to find the suitably qualified and skilled professionals they need to fill roles.
A deeper dive into the data for some of the key industries of the UK economy further highlights the growing divergence between job vacancies and applications. The engineering industry, for one, is in dire need of talent to help meet 2050 net zero challenges, particularly in areas such as renewable energy and nuclear. Skills shortages have been a problem over the past two decades — the shortfall of STEM workers is in the hundreds of thousands, which carries a huge economic cost. Upskilling and reskilling the workforce in digital and environmental sustainability must be a top priority.
Looking at the numbers, we find that engineering jobs were by up by 3% month on month in June, the biggest increase of all industries. Indeed, the sector accounted for over one in 10 (11%) job vacancies, a clear indicator that companies are looking to grow despite the economic slowdown and stagnant growth. However, the number of applications fell by almost a third (32%), a sharp decrease that highlights just how severe the lack of talent is. This will add to the woes of organizations looking to source the specialist skills they require in areas such as green engineering.
Fall in IT and Tech Applications
Demand for talent has also remained buoyant for the IT sector, driven by a requirement for expertise in areas such as digital, which we expect will only continue to grow. An interesting trend we are seeing is that despite the thousands of tech layoffs around the world, notably among the “FAANG” companies, the number of applications and the Application Per Vacancy (APV) rate has fallen. This would suggest that skills shortages are still prevalent as organizations face hiring challenges. A lack of STEM graduates and females entering the industry are two regularly cited causes.
IT job vacancies fell by 4% in June compared to the previous month but still equate to 10% of the total (followed by education and training on 7%). This would suggest that demand for talent remains buoyant despite the recent spate of redundancies. However, much like engineering, the big worry for employers is that application levels have plummeted by 25%, thereby significantly shrinking the available talent pool to choose from. The APV rate also fell markedly by 22% in June 2023, the biggest month-on-month drop in the past 18 months (except for December 2022).
Addressing UK Skill Shortages
As we can see from our latest data, the most concerning trend is the fall in vacancies, which far exceeds any marginal increases or decreases in the number of jobs. And while consumer price inflation has started to come down — the latest ONS figures revealing a drop from 8.7% to 7.9% in the 12 months to June 2023 — the cost of living crisis will continue to have an impact on real wages. Rising interest rates have put the brakes on expenditure at a time when organizations need to invest in their talent attraction and development strategies if they want to remain competitive.
Yet while the skill shortages will continue to affect engineering, IT and so many other sectors of the UK economy, it is imperative that organizations refine and fine-tune their talent attraction strategies to boost outcomes. Now is the time to review and improve hiring processes and pick the right channel mix to engage with diverse talent pools so that they can give a much-needed uplift to those waning application numbers. Those that can offer the most compelling employee value propositions (EVPs), especially aligned to the needs of Gen Z, will win in the talent stakes.