According to findings of the House of Lords Economic Affairs Committee (Where have all the Workers Gone, 20 Dec 2022), early retirement amongst those in their 50s, is the biggest cause of the current labour shortages in the UK.
Older workers, with their years of experience and skills, are an important asset to businesses. As they leave their roles in droves (565,000 are estimated to have left employment since March 2020), they leave a skills gap which impacts on the ability of businesses to grow. Added to that, reduced economic activity leads to decreased spending power and reduced economic growth, putting further pressure on business growth plans.
The House of Lords committee was relatively silent on the reasons behind this mass exodus from the workforce, citing COVID lockdowns as a cause for people experimenting with “different lifestyles during the pandemic – they were forced to stay at home or work fewer hours – and then changed their working lives as a result, even when the pandemic restrictions changed back.”
However, the COVID lockdowns likely only accelerated a trend that was already underway. It has long been recognised that far too many employees are disenchanted with their roles and the companies that employ them. Large polls by organisations such as Gallup, regularly show that only a minority of employees, often fewer than 10%, are considered to be highly engaged at work and a majority are either not engaged or are disengaged. It should not be a surprise that, given a glimpse of a different lifestyle, freed from work that is not enjoyable or fulfilling, many people have chosen to disengage altogether.
One solution to the labour shortage is therefore to focus on retention of staff. This will reduce the need to recruit new employees. In addition, anything that improves retention will also improve the package available to attract new recruits. The current focus appears to be on pay rates. But time and again this is shown not to be the real issue. People expect a fair rate of pay for the work that they do, but they become more assertive about pay when they feel devalued by their employer: poor working conditions, unreasonable workload expectations, inflexible management, for example. Increasing rates of pay is also the wrong tool to use when dealing with people who have decided they are sufficiently comfortable not to have to work. In this case, they want to feel valued, do work that makes a difference, be respected as an individual, be proud to work for an employer that has integrity.
Employee retention must focus on these things first, otherwise pay always becomes the defining disagreement. What have you got in place to make employees proud to work with you? Is it working? To determine how invested your employees are, you might consider conducting an employee survey, such as the Employee Investment Index. You can download a sample report, here.