@OpenUniversity Business Barometer - £1.2 billion spent on temporary hires to plug skills gaps - while redundancies rise
- A quarter (25%) of organisations having made redundancies so far in response to the COVID-19 pandemic
- But despite more candidates on the jobs market, skills gaps remain as senior leaders continue to spend big on acquiring the talent they need, with £1.2 billion spent last year on temporary staff
- The Open University is encouraging employers to prioritise spending on training and development of their workforces to aid their recovery from COVID-19, and further challenges
UK organisations are spending millions to fill skills gaps with short-term staff, while at the same time letting go of employees.
According to The Open University Business Barometer one in four (25%) businesses have made redundancies in the wake of COVID-19.
Yet over the last year, expenditure on temporary staff has reached £1.2 billion, as employers look for quick fixes to recover from disruption brought about by the pandemic, but the university warns that this approach to skills acquisition is unsustainable.
A growing number of candidates has not managed to fulfil business leaders’ changing demands, as organisations have spent more than £6 billion on inflated salaries, temporary staffing, recruitment fees and training, as the pandemic accelerates diversification and new skills requirements.
As a result, despite more than half (52%) of senior leaders reporting that their organisation’s survival depends on reducing costs, expenditure on plugging skills gaps has swelled by 39 per cent over the last year.
But with the average waiting time to fill a vacancy continuing to rise despite rising unemployment, now taking nearly 2 months, employers worry about struggling to find the right people, with management and leadership, and digital skills most difficult to find. And moving forward, leadership skills are expected to be the most sought after with 39 per cent of employers expecting to require more leaders to navigate further disruption in the next 12 months.
At the same time, in a drive to boost diversity more than two thirds (67%) are committed to hiring future employees from more diverse backgrounds, while nearly 37 per cent are actively looking to hire candidates from the area local to their business. While these initiatives are beneficial to breaking the cycle of low-paid work, half of senior leaders admit they lack understanding of local skills deficit, which threatens to cause further delays to attracting the right candidates for emerging vacancies.
COVID has also seen the end of "cookie-cutter" recruitment - where organisations look to fill vacancies with vocational skills - in favour of bringing in transferable skills in an attempt to keep up with the ever-changing business landscape. Nearly two in three (61%) employers value adaptability and agility as qualities in new candidates as a result of the pandemic and subsequent disruption.
But with nearly half (48%) of employers acknowledging that apprenticeships and work-based learning initiatives will be vital to their organisation’s recovery over the next year, the OU is urging employers to think ahead to the skills gaps they are likely to face in the future. Establishing a longer-term approach to developing the talent they need through work-based training will help prevent further inflated costs and delays to filling vacancies.
Viren Patel, corporate director at The Open University responded to the findings: "It's unsurprising that after such a challenging year, business leaders are looking for quick fixes to talent shortages. And while hiring in short-term solutions to skills vacancies may solve the immediate issue, we know that further change is coming, and this cycle of hiring and firing will prove expensive and unsustainable.
"The massive increase in available workers in the labour market is not increasing the supply of the skills that businesses most need to help them respond to and recover from the crisis, instead, the skills that are in short supply have become more valuable as organisations chase a pool of talent that was already very low before the crisis began. Organisations that instead adopt a "grow your own" approach to the roles they need, and re-skill colleagues into relevant roles, will find themselves able to adapt to further challenges and uncertainties more quickly than those buying them in, whilst cutting costs."