It’s no secret that skills shortages are rife across the UK and indeed the world. There just simply isn’t enough talent to meet the demand, and skills aren’t being developed at the required pace. 

In recent years we’ve seen extremes from the pandemic hiring freeze to the subsequent Great Resignation impact the labor market. The latest phenomenon appears to be the concept of labor hoarding.  

As businesses await the inevitable bounce back of the market, we are seeing an increasing number of employers channeling efforts into retaining employees to avoid the costs of hiring again in the near future. In a market that is already facing a dearth of resources, this is only exacerbating the limited access to key talent. 

While we can’t concretely prove that labor hoarding is reducing the number of people looking for new jobs, it can’t be a coincidence that we’re seeing application levels fall drastically in a number of key sectors.  

Financial Services and Legal Sector Skill Shortages 

In fact, according to our latest reports — in conjunction with Veritone Hire — there is a growing disparity between the fall in new jobs and the decline in active candidates. If we take a look at the financial services and legal sectors, the extent of this talent crisis is evident.  

According to the data, the number of people applying for permanent jobs in financial services more than halved in the month between April and May of this year, down 57%. Vacancies did fall during this timeframe, but only by 25%.  

As the seasoned recruiters among you will well know, a fall in permanent applications is usually offset by an increase in contractors applying for work, but the data suggests otherwise. For the same period, the number of professionals applying for contract roles in financial services fell a staggering 62%, despite jobs only dropping 26%.  

This trend is being noted in other sectors too. In legal, for example, applications for permanent positions fell 60% between April and May, while contract positions saw a 58% decline in people applying for a role. In comparison, job postings fell 27% for permanent and 23% for contract positions. 

This pattern has been growing for some months now across multiple sectors and with signs that the economy is starting to at least stabilize, this expanding gap in supply and demand of skills is concerning.  

Focusing on the Skills Agenda 

For staffing businesses, simply channeling more efforts into winning the war for candidates isn’t going to have a long term, positive impact. Instead, recruiters need to be part of the conversation and subsequent solution around creating a sustainable source of talent in core remits.  

With a new government now in power, Apsco, its members and trusted partners — and indeed the recruitment sector collectively — all have a role to play in putting pressure on political decision makers to keep skills growth top of the agenda.  

In fact, in its our own manifesto launched earlier this year, Apsco highlighted the critical need to tackle the professional skills crisis in the UK and how that can be achieved. Reform of training, immigration and public sector recruitment is urgently required, and we will work closely with the new cabinet to ensure this happens swiftly and efficiently.