Can digital recruitment help solve the skills shortage?
The UK is currently experiencing a skills shortage, which, if not addressed, the Recruitment & Employment Confederation estimates will cost the UK economy £39 billion each year from 2024.
The statistics are worrying, with 13.3% of businesses reporting to the ONS a shortage of workers in November 2022, and the Federation of Small Businesses finding, in August 2022, that 80% of small firms faced troubles recruiting candidates with the suitable skills in the previous 12 months.
Vacancies remain much higher than pre-pandemic levels, with the health and social care sector facing the highest number of vacancies.
In response, solutions have been sought in a number of areas, from adjusting visa requirements for skilled workers from the EU, to encouraging the recently retired back into the workplace.
The OBR (Office for Budget Responsibility) estimates that budget reforms will place only 100,000 more people in the labour market – which leaves another 1.1 million vacancies to fill.
But with new digital technologies being introduced to streamline and modernise the hiring process, can innovation provide a solution to the skills shortage?
The skills shortage post-pandemic is attributed to an increase in people who are economically inactive (neither in work, nor looking for work). Some of the reasons experts have cited include:
Early retirement – 13% of those who are economically inactive are so because they are retired. The UK labour market has seen 375,000 more 50-64 year olds taking early retirement, meaning that 27.6% of this age group are now economically inactive – up 2.4 percentage points since pre-pandemic levels.
Long-term illness – 28% of economically inactive people were so due to a long-term illness in November 2022-Jan 2023 - 412,000 higher than pre-pandemic levels.
Higher education – A quarter of economically inactive people reported that they were so because they were students. The number of people in higher education rose last year by 100,000.
Brexit - According to The Bank of England, slowing population growth is partly responsible for a decreased labour supply, which has been driven by lower net migration from the EU. There are differing views on the extent that new immigration rules post-Brexit have impacted supply chains in the UK.
Digital hiring and the labour shortage
The UK has one of the slowest hiring processes of developed countries globally, which is an indication that the hiring process needs to be modernised in order to speed up recruitment country-wide. With such severe skills shortages, it’s critical that barriers to the workplace are removed, including any barriers within the hiring process.
Digital hiring innovations are being developed to build a more efficient, streamlined recruitment process, meaning vacancies are filled more quickly and the pressure put on existing employees to pick up the slack while desks lie empty is eased.
Innovations like digital ID and instant referencing are all designed and in development to make the recruitment process more efficient, more secure, and more accessible.
Creating a digital identity is fairly widespread, and employees may find themselves creating one from scratch each time its needed by scanning physical documents. However, a trusted digital ID that is portable between jobs and can be shared over and over will provide a fast, secure way for employees to share their data with employers for ID verification, screening, and onboarding. This could be used for job applications, but also for holiday bookings, account setup, and a plethora of other applications.
The benefits of digital identity in employment include:
- Improved candidate and employee experience
- Efficiencies gained when integrated across the full employee journey
- Ability to combine digital identities with verified attributes to meet specific needs
- Compatible with remote and hybrid work environments
- More secure and less susceptible to fraud than physical processes.
Internally, digital identities can be integrated with other systems. For example, integrating data on employees’ training via their digital IDs with the internal compliance system means that it’s simpler to ensure that individuals are correctly trained in essential issues related to their position.
Research conducted by Reed Screening showed that 65% of employers said that referencing was the most time consuming part of the hiring process.
To remove barriers to work and speed up the hiring process, an alternative is essential. Digital referencing uses payroll and open banking data to verify dates of employment and salary, and when linked to a digital ID has the potential to significantly accelerate the hiring process.
Pioneering solutions, consent-driven processes allow users to share their payroll and open banking data on a single-use basis. That data is then used to determine when and where they worked and can be shared instantly with any party privy to their employment verification. This solution is already returning data that used to take days to be surfaced, in seconds.
In 2022, we invited our candidates to measure the effectiveness of the system, and the high-level results were a resounding success: 43% of requests completed within three hours and 70% were done within a day.
Whether digital hiring solutions are the saviours of the UK labour market or not, leveraging digital innovation is already producing exciting results for the future of recruitment, and are likely to contribute to a faster, more streamlined pathway for people to step into work.
How can Reed Screening help?
With over 60 years of experience in recruitment, and over 12 years’ experience as screening specialists, Reed Screening is ideally placed to advise your organisation on the best way to ensure that your digital recruitment processes are beneficial to your company’s performance.
At Reed Screening, we’re dedicated to making the recruitment journey as smooth as possible for both employers and candidates, to help our clients source and retain the talent they need. Speak to our team today to find out how we can streamline and enhance your recruitment journey and boost performance in 2023.