Imagine the labour market as a wide river providing vacancies to the UK, pushed along by the steady flow of job seeker demand for opportunities. This once thriving river is now almost motionless. The labour market has seen a halt in growth for the first time in thirty years, and the gap between the numbers of jobs and jobseekers is growing, despite a rise in vacancies.
The steps outlined within the release of the Spring Budget hope to bring 110,000 individuals back into economic activity with comprehensive employment packages that clear some of the obstructions in our metaphorical riverbed. But does the Government’s agenda do enough, or does the sector require true innovation to plug the labour gap and rejuvenate that stagnated flow?
To find out, let’s dive into the impact of government investment into skills and training, the role of digital solutions in employability, and how market disruptors are already making waves.
Navigating the currents: The labour gap
The labour gap has become a pressing concern in the UK job market, with over 13% of businesses experiencing a severe shortage of workers. There are various factors contributing to its current stagnation, including:
- An ageing population: A ‘Silver Economy’ of over 50s taking full or partial retirement early, and older workers retiring without younger workers available to replace them. This demographic shift has created a vacuum, leaving many positions unfilled and causing a noticeable ripple effect through various industries.
- Marginalised workers facing barriers to entry: These issues include discrimination, lack of access to education, training, digital poverty, and/or mental and physical support needs. These obstacles, and the individuals facing them, often experience no clear pathway or guidance. This lack of direction is hindering a large portion of the UK’s prospective workers and their ability to enter or re-enter the workforce and secure stable employment.
There’s also the economic inactivity and uncertainty that followed the COVID pandemic, and Brexit’s change to immigration policy making it a challenge for foreign workers to secure jobs in the UK.
Even as an unexhaustive list, the combination of these factors alone indicates why we have a significantly contracted labour pool with vacancies 282,000 above pre-pandemic levels.
Clearing the obstacles: Government investment in skills and training
It’s clear that addressing the labour gap will require a multifaceted approach to re-establish a healthy market. Clearing the obstacles will require a concerted effort from various stakeholders, including the government, the private and public sector, and educational institutions.
The Department for Work and Pensions (DWP) have launched their own ‘Back to work’ Budget, which demonstrates the government’s commitment to investing in skills and training programmes, digital solutions, and initiatives to help bring back the so-called ‘missing million’ workers. All of which should be crucial steps towards revitalising our river. But does it go far enough? Will it generate the impact that other recent employment programmes, such as the notoriously turbulent Restart, struggled to deliver?
The Back to work Budget represents a £3.5 billion investment over five years to boost workforce participation. This includes targeting some of the root causes and blending it with tailored solutions. With £2 billion specifically earmarked to support those with disabilities and long-term health conditions, as well as additional investment in supporting parents on Universal Credit, and promoting flexible working for the over 50s, targeting those early retirees of the Silver Economy.
Focusing on relevant parts of the budget, Reform.uk discussed the changes in disability benefits, childcare, pensions, and Local Enterprise Partnerships (LEPs) and the analysis suggested the strategies hold potential, but they also carry potential limitations in addressing employability and the labour gap.
- Disability Benefit Reform: Introduces a ‘health element’ to Universal Credit as a way to incentivise disabled individuals to enter employment. It reduces the risk of being financially worse off if the job does not work out.
- Childcare: Expanded access to free childcare, aimed at helping working parents balance their professional and personal responsibilities, especially among women who often bear a disproportionate burden of childcare duties.
- Pension Tax Reform: The allowances say they are aimed at ‘tackling economic inactivity’ but the change primarily benefits a small group of top earners. The majority of workers won’t see any direct impact.
- Local Enterprise Partnerships (LEPs): The potential replacement of LEPs with “democratically elected local leaders” is not necessarily a con, but we cannot quantify its effectiveness. It may enhance or hinder employability because it’s entirely dependent on the effectiveness of these new local leaders.
Collaboration with businesses and educational institutions will also play a critical role, through their ability to upskill and reskill individuals to meet the demands of an evolving job market. These organisations have the ability to leverage digital tools to reach a wider audience and provide tailored learning experiences, in ways that central government funded programmes may be unable. Companies are also being encouraged to offer mentorships, apprenticeships, internships, and ‘returnships’ – an internship for individuals who have been away from the traditional workforce for a while.
A central takeaway from Reform UK’s analysis is that the Office for Budget Responsibility (OBR) has already projected unchanged labour market participation in the near future, so these policies serve only to offset recent drops in participation without effectively closing the labour gap.
These measures act as a metaphorical dredging of the riverbed, removing known obstacles and allowing the currents to flow more freely. But, will that alone increase employer investment in skills?
Stimulate stagnation: The role of digital
The government plays a crucial role in funding and removing obstacles, but we also need to see more emphasis placed on encouraging innovation and continual improvement within employability programmes.
Without support from central procurement, larger providers have little to no drive to proactively incorporate new methodologies or technology into their contract delivery. Leaving the stage set for the sector to fall back into pre-existing patterns. Practices we know just don’t deliver results anymore! Our home lives and workplaces, as well as many barriers and motivations for employment, have shifted in the last three years. Therefore, the way we tackle them must also.
Digital interventions can act as bridges that span the river, enabling individuals to cross and access opportunities they may have thought were out of reach. By harnessing the power of technology, we can streamline the job-seeking process and create a more inclusive pathway to employment.
Making waves: Innovators driving positive disruption
Solutions such as Reed’s Keep Britain Working campaign, and tools and platforms like Google’s job search tool and Grow with Google, Jobscan, and Coursera’s Career Learning Paths are all making strides in addressing the labour gap, but they lack the personalisation and holistic job-seeking support that address confidence and motivation. To better prepare individuals to remain resilient, we need to help change the mindset of jobseekers, not just provide skills training.
And there is reason to be optimistic. Solutions that promote a self-managed journey to learn, plan, and reflect already exist and are making impact. This includes Saffron’s own Create Your Own Future (CYOF) which leverages an AI mentor who sits alongside work coaches, IAGs and more ‘traditional’ delivery methods to take the individual along a self-service pathway of training, guidance, and personalised support. Enabling them to develop the skills to excel in their chosen career, but also equipping them with tools, confidence and motivation to seek employment.
CYOF recognises each jobseeker has a unique set of challenges, interests, and goals. It’s about empowering individuals to prevent gaps from appearing in the first place. Offering a user-centric intervention that focuses on the specific needs, skills, and aspirations of each individual, ensuring a tailored and effective approach to their job search.
Already being implemented in parts of the UK and with local London authorities, CYOF demonstrates that a combination of targeted government intervention and innovative solutions that embrace digital technology can help revitalise the labour market.
Now is the time to take action. It’s more than just funding and policy changes – it’s about utilising digital innovation and delivering personalised interventions. Together, we can help clear the path for the ‘missing million’ and revitalise the UK’s job market. The government, private sector, educational institutions, and innovative solutions like Create Your Own Future all have a role to play in this effort.
A rising tide lifts all boats – John F Kennedy, 1963
Together we can turn the tide. Saffron is actively fostering partnerships that place individuals at the heart of employment support.