Fulfilling employer needs for employability and skills

David MasseyUK Commission for Employment &

Skills

– Some context for the UK labour market

– Evidence from ESS 2011 on where the employment opportunities are

– What this means for unemployment in the UK

Presentation overview

10 years to return until next

low point

7 years to return to precession

levels

Over 20 years to return to pre 1980s

recession levels

Context: The long-term trends in UK unemployment

Source: ONS Unemployment Rate, quarterly series LF2Q

Unemployment rose for 1.5 years before reaching a

plateau for 2 years

Vacancies have fallen but there is also evidence of mismatch

2007

20112009

2008

2010

1.3m

480k

Mismatch can be partly explained by significant structural change. A net fall of 800k jobs disguises large sectoral shifts

Changes at the occupational level reveal a polarised picture

What is the impact of these changes? Trading down and very competitive market

2.3m inactive but would like a job

1.6 m looking for another job

300k looking for an additional job

Source: “Job Tenure and Job Turnover” (Faggio, Gregg, Wadsworth) , 2011

Source: LFS

So where are the opportunities in the labour market?

• The UK Employer Skills Survey 2011 (ESS 2011) is the key UK data source on employer recruitment needs. Survey of 87,500 “establishments” across the UK in spring 2011 with key findings out today.

• The survey is an establishment bases survey which samples and asks questions at the local unit level. For example in the case of large retail chains or supermarkets the respondents will be individual branches as opposed to someone very senior responding once on behalf of the entire supermarket/chain.

• 12% of establishments have a vacancy amounting to 636,000 vacancies. Issues with time series at UK level but country level reports will discuss trends. Nevertheless there are still opportunities in the labour market.

So where are the opportunities in the labour market?

“The majority of jobs each year in the UK are created by small firms. Their rate of job creation and destruction, particularly within micro enterprises, is much greater ‐than larger firms. Out of a total of 2.61 million jobs created on average each year between 1998 and 2010 existing small firms (i.e., less than 50 employees)

contributed 33 per cent (i.e.,

0.87 million jobs) while start‐ups contributed a further third (34%) – approximately another 0.87 million jobs.”

BIS research emphasises the importance of small businesses

Source: BIS - “Job Creation and Job Destruction in the UK: 1998 – 2010”

Potential implications of a shift to vacancies from smaller employers

• Vacancies are more diffuse across the economy which means that its harder for individuals to find out about them.

• Smaller employers are more likely to use informal recruitment methods, these tend to disadvantage unemployed people who are disconnected from social networks.

• Smaller employers are less likely to use Jobcentre Plus in their recruitment. This further lessens the chances of unemployed people.

What type of occupations are vacancies available for?

How easy do employers find it to recruit?

• As we noted before an improvement in vacancy levels is not alone sufficient to reduce unemployment. Employers must be able to full their vacancies

• Even in with current labour market conditions

employers describe just under a quarter (23%) of their vacancies as hard to fill.

• Difficulty in recruiting again varies by size of business and the type of occupations being recruited to.

How easy do employers find it to recruit?

How easy do employers find it to recruit to different occupations?

What are the causes of hard to fill vacancies?

• Almost three quarters (72%) of hard to fill vacancies are down to a lack of skills, qualifications or experience of applicants. These are known as skills shortage vacancies

• Other cited reasons are:

• Lack of interest in the job (22%)

• Lack of applicants generally (15%)

What skills do employers struggle to find?

Conclusions