In this briefing we explore the current labour market trends in the UK, and how these trends might impact the NHS workforce and employing organisations. We've also shared some helpful resources that will help employers to navigate the economic recovery.
The NHS is often the largest employer in a region and, as a result, large numbers of the workforce come from the local community. Shifts in both local and national labour markets affect an organisation’s ability to recruit and retain, so any local response to recruitment and retention must take account of the pressures and opportunities of the wider labour market, particularly for those roles for which the service has active competition for labour from other sectors.
This resource displays key statistics, context around why UK labour market trends are important, signposts to available support and encourages you, as an employer, to consider how to prepare your responses to current UK labour market trends with both short and long-term solutions.
Overview: December 2022
After an initial sharp fall in employment during the first wave of the pandemic, there was a rapid recovery in employment figures in the latter half of 2021 when restrictions eased. However, that recovery appears to have levelled off and the number of those not looking for work and/or not available for work has been continuing to rise until now. Latest data shows inactivity due to retirement and ill health are down slightly, with the other main reasons broadly flat (which includes reasons related to COVID-19 as well as those who say that they do not need a job).
At the start of the pandemic, rising inactivity was driven by young workers, and by older workers, where the rise in not looking for work was related to COVID-19 restrictions and increasingly, long-term ill-health. Since restrictions eased in the second half of 2021, younger people have increasingly come out of inactivity, but it was older workers who were continuing to leave the labour market. There are signs in recent data to suggest the small falls in economic inactivity are most pronounced among people aged 50-64, which is explained by higher employment among that age group.
Nonetheless vacancies remain very high by historic standards, and the inability to fill these jobs is contributing to the wider slowdown in the economy and is holding back growth.
High vacancies and demand for talent
Vacancies remain very high (1.19 million), but are now falling back, down by about 9 per cent on their peak in the early summer. Predominantly in private sector industries, with public sector vacancies flat or rising (IES analysis of ONS Vacancy Survey findings and Labour Force Survey data).
As a result, unemployed workers face more job vacancies that match their skills than they would have done before the pandemic. When there are ample employment opportunities, you will need to work even harder to attract talent. Ensuring recruitment processes remain fair, inclusive and provide a good candidate experience are important elements of becoming an employer of choice and using recruitment to also support retention.
Low unemployment masking continued labour shortages
There are early signs to suggest more of those who are economically inactive might be starting to return to the labour force, but inactivity remains high (IES analysis of ONS Vacancy Survey findings and Labour Force Survey data).
Unemployment is pretty much at its lowest since the early 1970s, but with employment growth flat and economic inactivity (the measure of those not looking for work and/or not available for work) high, low unemployment is due to more people leaving the labour force entirely rather than more entering work. Demand for flexible working is a golden thread that unites the majority of those who are ‘economically inactive’ and want a job (parents returning to work, disabled people, older people, those with health conditions). Supporting staff to work longer and offering flexibility to attract and retain the workforce will continue to be an important focus for employers.
Fewer older people in work is contributing to economic inactivity
Economic inactivity among those aged 16-64 is 565,000 higher than at the start of the pandemic (rising to 920,000 higher if those aged over 65 are included). (IES analysis of ONS Vacancy Survey findings and Labour Force Survey data).
Very few of those in their 50s considered themselves to be retiring, many would come back for the right job, and most are living on pensions/savings and are not on benefits. Therefore, there is more employers could do to make work more attractive and accessible for over 50s. Making certain recruitment processes remain fair and inclusive and proactively ensuring that age and the ageing workforce is a thread through all organisational practices will also support staff to work longer in the NHS. In turn, increasing participation across older people will help to manage economic recovery and retain the skills and knowledge in the sector that would otherwise be lost.
Increase in the number of young people (aged 16 – 24 years) who are NEET
There has been a small increase in the number of young people not in education, employment or training (NEET) with the total currently estimated to be 724,000 (ONS data).
Young people who are NEET risk experiencing unemployment throughout their lives and poor mental and physical health. Keeping focus on youth employment practices and how to connect with marginalised and disadvantaged young people in your community through sustainable pathways into employment will be essential.
Overseas recruitment continues to complement the skills available within the UK labour market
Recruiting from outside the UK to supplement UK-based training and recruitment and training from within local communities remains an option for some roles in the sector.
Current vacancy data, workforce numbers, the numbers of people available for work and the training times required for some health occupations, tells us that the UK labour market alone will not fulfil the sector requirements in the short to medium term. Any overseas recruitment should be undertaken in accordance with the ethical Code of Practice. Examples of employers collaborating to share resources and expertise have shown to use resources more effectively and deliver savings.
Information and Resources
Key to managing economic recovery will be through more inclusive recruitment, use of initiatives to support access to employment, good job design (particularly around flexibility), induction and in work training, as well as workplace support for staff with health, caring and wider needs. Our tools and resources can support you to prepare your response to the current labour market trends with both short- and long-term solutions:
Resources and guidance to help employers ensure they are able to sustain a workforce pipeline.
A guide to increasing supply, widening access to employment and addressing inequalities that persist in communities by providing work opportunities.
Provides tips and tools to support employers with taking positive action to improve retention.
1. Institute for Employment Studies (IES), Labour Market Statistics - Briefing December 2022, https://www.employment-studies.co.uk/resource/labour-market-statistics-december-2022
2. Office for National Statistics (ONS), Young people not in education, employment or training (NEET), UK: November 2022, https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/bulletins/youngpeoplenotineducationemploymentortrainingneet/latest