Why low levels of unemployment make a placement scheme more attractive.
The economy is in quite a questionable position at the moment with many crises occurring. With the mini budget causing the pound to fall, the media saying that the cost of living is skyrocketing and inflation steadily rising. One area that is being overlooked is the worryingly low levels of unemployment. This might come as a surprise however a reasonable level of unemployment is crucial in order to maintain a competitive labour market. This blog will go on to explain why any employer should be worried.
After the pandemic, economists thought that unemployment levels would shoot up and it would become a large problem in the UK. What actually happened was that once COVID restrictions eased off, unemployment levels returned to normal and fell. This, combined with the strong economic bounce back where GDP grew by 7.5% by the end 2021, has created a very tight labour market. Employers are finding it increasingly more difficult to fill their vacancies, in an environment where there are more vacancies than ever due to strong economic growth. ￼
Another huge factor that is affecting the labour market is the massive growth in economically inactive people we’ve seen since the pandemic started. Economic inactivity is where people between the age of 16-64 are choosing to not be involved in the labour market. Anyone who is not actively job seeking, including students, is classed as economically inactive. There are over 400,000 more economically inactive people now than before the virus hit, partly due to long term illness. When you consider the fact that there is currently a record breaking 1.2 million vacancies, you realise that low unemployment has become a massive issue.
You might be thinking, what does all of this have to do with me? Well, if you own a small business or might be looking to take on new employees in the next few years this is crucial for you to consider. Businesses are being forced to compete for talent and are having to offer increased starting salaries The power dynamic has started to shift in favour of the employees where they are being poached by companies or offered huge joining bonuses. Trade unions are fighting for higher wages and warning that tens of thousands could strike over pay.
What this means is that it’s becoming increasingly harder for employers to find skilled employees at a pay range that they’re comfortable with. This could result in the growth of small businesses stagnating as they won’t be able to keep up with demand. This comes at a huge opportunity cost to the businesses because they would lose out on all the new clients they could have. Or companies might resort to bringing in less than ideal candidates just because it’s the only choice they have, which could actually be worse for the business than not bringing anybody in.
The simple solution is, if the labour market isn’t in a great place, look elsewhere! Students and undergraduates aren’t a part of the labour market but they’re a great source of untapped potential. Most universities offer year-long placements. Where companies can employ an undergraduate to address current projects and plug the gap left by a lack of skills in the labour market. Placement students often have lower salary expectations than graduates. This means that you can bring in a talent pipeline without the financial outlay or time commitment of a graduate.
Short term summer internships are also a solution. If you are about to come into a busy period for your business and are feeling a little understaffed, you could bring an intern on board for 3 months to help you through. Offering internships is a great way to develop your talent pipeline and attract more great candidates in the future. You never know you might end up offering them to stay longer or to come back once they’ve finished their course.
Many universities have now designed programmes specifically to attract international talent. This is another rich source of skills, which you can tap in to. Many programmes have a placement element, and once this has finished the graduates should be eligible to apply for the graduate visa. This means you could retain them in your business for up to 3 years before you even need to consider sponsoring them.
The current labour market has become a hunting ground for qualified candidates and only a select few companies are able to succeed. That’s why it’s important to open your mind to new talent pipelines.