Action Needed in Budget to Deal with Workforce Shortages

Professor Alexander Nunn, Y-PERN Academic Steering Group member and Dean of Research, Leeds Trinity University

Wide-ranging and long-term support needed across a range of policy domains including employment services, skills, housing, transport, childcare, workforce wellbeing and immigration.

It is widely noted that employers are facing labour shortages. The latest data from the ONS suggests that around 12% of employers are facing a shortage of workers and that this rises to nearly a quarter in the ‘accommodation and food service’ sector and more than a fifth in ‘human health and social work’ organisations. These figures are more pronounced than they look though because of the effect of the large number of smaller employers who are less likely to report shortages. More than a quarter of employers with 10 employees or more report labour shortages. That said, the Federation of Small Businesses report that nearly 80% of small firms have struggled to fill a vacancy in the last 12 months.

In sum, workforce shortages are a major challenge now and unless urgent action is taken this will remain the case into the medium term.

There are a range of causes for the current shortage of workers:

  • Childcare costs and constraints – one feature of our current cost of living crisis is the price of childcare (which is also in part driven by a shortage of labour).  Costs and problems in access (e.g. childcare provision not matching work times) are preventing many families from working or working as much as they would like to.  This is a particular problem for women, especially lone parents, but it is a major problem for most families with children, even when in relatively well paid work.
  • Low pay and low quality work – while wages may be growing as a result of current labour shortages, relatively low pay (and low quality work) following decades of pay suppression is also likely to be part of the problem and adds to the cost of working crisis.  It would be a surprise to many that even workers in what might be thought of as relatively secure and high-status jobs might now be so low paid relative to costs of living that going to work is not financially rewarding.  Many now require significant help from Universal Credit to stay in work (2.3m people are working and rely on Universal Credit to make ends meet, almost 40% of those on UC).
  • Lower migration-  in the aftermath of Brexit and the various incarnations of a ‘hostile environment’ also drive labour shortages.
  • Ineffective matching of supply and demand – One notable aspect of our current labour market is that the number of vacancies reported over the last year or so roughly equals the number of people who are unemployed and available for work.  This hints at three issues: (1) poorly matched skills (those who are unemployed do not have the skills and experience to meet the requirements of vacancies), (2) poor levels of support for people bridging the gap between their current skills and those that employers are looking for and (3) problems with workers moving to areas where there are vacancies via commuting (because of transport problems; as anyone regularly trying to commute across the Pennines will readily attest) or relocation (because of the price of housing).

This is both a short-term problem and creates longer-term constraints on growth; as people withdraw from the labour market their skills lose currency and the likelihood of them returning to work at an equivalent skill level decreases. 

With all this in mind, Government action in the Budget to address each of these issues would be welcome:

  • Help with childcare costs through an uplift in Universal Credit payments has been promised already.  This is welcome but challenges remain and the prospect of this being matched by greater expectations for recipients may prove ineffective.
  • Measures to improve the skills offer and support for the unemployed rather than merely relying on benefit conditionalities are badly needed. This is not a matter of being nice or nasty to people that any one particular section of the electorate may see as deserving or otherwise.  Rather, it is absolute economic necessity that will benefit all of us through increased growth, increased tax revenues and a more socially just society.  The support needed is wide-ranging.  Part of this is about well-designed and accessible training matched to areas of skills growth in the economy.  However, it is also about other forms of support, notably mental health services and services supporting people with other needs such as addiction.
  • Special measures to incentivise older workers back into the labour market may be needed but there are some signs that this is already happening. However, the issues in our labour market that led to the Great Resignation were a long-time in the making.  Measures on the supply-side of the labour market will increase skills in the workforce, but reforms are also needed to improve pay, work quality and employee wellbeing.  Long-term structural change is required across a range of policy areas.  These include workplace cultures, improving employer skills utilisation and training provision.  They also include housing issues; housing costs have played an increasing role in overall inequality over a period of thirty years or more.
  • A new approach to migration – Successive governments have whipped-up an unhelpful political climate on migration and then responded to that climate by both rhetorically and materially constraining migration, especially, but not only, by ending EU free movement.  There are many reasons why this is problematic. Restoring the prospects for growth is just one of them. 
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The future impact of the members of Yorkshire Universities: an assessment

In this analysis we present a forecast of the impact of YU member institutions over the next five years.

The research uses historic data to predict the future impact of the twelve members of Yorkshire Universities: the universities of Bradford, Huddersfield, Hull, Leeds, Leeds Beckett, Leeds Trinity, Leeds Arts, Sheffield, Sheffield Hallam, York, and York St John, as well as the Leeds Conservatoire.

The exact methods differ depending on the data source and are detailed in the methodological note. However, we make several assumptions: that the economic and policy environment remains stable, that universities continue to be able to engage in similar activities and are supported to do so, and that demographic trends and the number and make up of businesses remains the same.

Given the widespread disruption of COVID-19, and other events with wide-reaching effects
such as the UK withdrawal from the EU, the rising cost of living, and Russia’s invasion of
Ukraine, conditions have changed markedly and will affect the forecasts. Understanding the implications of policy changes is also complex. For example, the end of support from the European Structural and Investment Funds (ESIF) programme in 2023 will mean UK nations and English regions are unable to access this funding, which has underpinned many job creation and regeneration projects. However, the UK Shared Prosperity Fund (UKSPF) offers £2.6 billion of funding for local investment by March 2025 (although concerns have been raised about the fund itself, and the potential for a gap in funding). In addition, specific policies and institutional practices may affect the accuracy of forecasts – where known these are detailed in the methodological note.

Download the report, including the methodological note here (opens in new tab).

Analysis and design by Open Impact.
Contact: james.ransom.16@ucl.ac.uk

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New YU Report: Universities and ‘Place Promotion’ in West Yorkshire

Report written by James Ransom, YU Associate

This discussion paper provides an overview of some of the key issues shaping the contribution of universities and higher education institutions (HEIs) to the promotion of place, and to attracting inward investment and increased trade into Yorkshire and the Humber, and in particular West Yorkshire.

It should be read against the background of the government’s commitment to increase total research and innovation (R&I) investment to 2.4 percent of national GDP, in particular as foreign-owned businesses in the UK spend more on this activity than domestically-owned businesses.

In addition, it also provides a contribution to discussions that have taken place at various times in the region as to how universities and HEIs help to attract and embed business investment and trade within and across city/sub-regions, regions and the Northern Powerhouse. The report also seeks to inform the emergent 2021-2025 Leeds City Region Trade Strategy.

This work is intended to stimulate debate and to provide a basis for potential actions going forwards. Overall, the region’s universities are well-positioned to strengthen their strategic relationships with Combined Authorities, metro mayors, local government, LEPs, business and others, and to collectively showcase nationally and internationally the unique strengths of higher education (HE) in the region as an asset to attract investment and jobs. In particular, some practical and immediate actions could include providing a feed of relevant university-focused news reports for local inward investment web portals, promoting the local higher-level skills base, and utilising international students and alumni more strategically.

Download the full report. (Opens in new tab).

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The creative industries matter to London, Yorkshire and the nation

As published in HEPI on 15 June 2021.

This blog has been kindly contributed by Dr Diana Beech, Chief Executive Officer of London Higher, and Dr Peter O’Brien, Executive Director of Yorkshire Universities – the umbrella bodies representing universities and higher education colleges across their respective regions. You can find Diana and Peter on Twitter at @dianajbeech and @obrienpeter72.

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Boosting regional research and development: The role of regional university networks

As published by HEPI on 14 May 2021

This blog has been kindly contributed by Dr Diana Beech, Chief Executive Officer of London Higher, and Dr Peter O’Brien, Executive Director of Yorkshire Universities – the umbrella bodies representing universities and higher education colleges across their respective regions. You can find Diana and Peter on Twitter at @dianajbeech and @obrienpeter72

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Yorkshire’s future depends on higher and further education

Dr Peter O’Brien, Executive Director

The last twelve months have seen COVID-19 impact in ways we could never have imagined. No one can fail to be shocked by the stories of how the virus has devastated lives, communities, businesses and places, but perhaps at the same time we are also inspired and thankful for the efforts of those on the front-line who have kept essential services functioning.

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Graduate labour market analysis and post-pandemic skills (Part 1 of 2)

Monika Antal, Executive Manager

Recently, I ‘attended’ The graduate labour market post COVID-19: priorities for university careers services and the role of universities, employers and government in preparing students event, hosted by the Westminster Higher Education Forum. With the economic crisis presenting new challenges for many young people seeking employment, including graduates, here is what I found out:  

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When a local economy collapses, we can’t just rely on the grit of communities

James Ransom, YU Associate

I’m a little late in reading Janesville: An American Story, Amy Goldstein’s tale of an industrial Wisconsin town in the depths of the Great Recession. The book received wide praise when published in 2017, telling the story of a community trying to pick itself up in the years following the closure of a major General Motors assembly plant. But the story has particular resonance now, as we stand on the cusp of another wave of economic upheaval. Here are three reflections.

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Future Ready Skills Commission Interim Report Feedback by YU

The aim of the Future Ready Skills Commission (FRSC), sponsored by the West Yorkshire Combined Authority, is to develop a blueprint for an education and skills system that can deliver against local economic priorities, the fulfilment of individual potential and the promotion of inclusive growth.

Together with FRSC, YU organised a roundtable in October to inform the evidence gathering stage of the review. The meeting was hosted by the Deputy Vice-Chancellor of the University of Huddersfield, Professor Tim Thornton, and attended by senior representatives from each of YU’s twelve member institutions, as well as commissioners and the secretariat from the FRSC.

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In what sense an innovation problem?

Dr Peter O’Brien, Executive Director, Yorkshire Universities

Yesterday I attended the annual conference of the Yorkshire and Humber Academic Health Science Network (AHSN), in Leeds, entitled, ‘Transforming Lives Through Innovation’. The previous day I was at the White Rose Consortium’s Industrial Strategy ‘Working in Partnership’ final conference, which showcased the contribution of the social sciences to meeting industrial strategy opportunities and challenges. The timing of the two conferences came a matter of hours after the first of four speeches by the Universities Minister, Chris Skidmore, setting out how the Government intends to achieve its ‘2.4% R&D/innovation investment’ target by 2027.

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Driving social mobility? Competitive collaboration in degree apprenticeship development

Guest blog by Claire Newhouse, Head of Apprenticeships and Skills, Leeds Trinity University

Degree apprenticeships present an opportunity for universities to contribute directly towards improving productivity by increasing the number of people in local and regional economies with higher-level skills.  They offer a new income stream for universities, but they also provide a means for diversifying HE entrants.  The dual role for apprenticeships, as a mechanism for boosting productivity and enhancing social mobility, is not without tension, although it can, at times, be taken for granted by government. 

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Higher-level skills for the future

Guest blog by Professor Tim Thornton, Deputy Vice-Chancellor at the University of Huddersfield

One of the key strengths of the Leeds City Region is its unique concentration of world-class universities, and the diverse contributions that each makes towards the higher-level skills and innovation agendas. As part of the wider Yorkshire region, Leeds City Region can rightly-claim to be a ‘skills magnet’, which is able to attract new forms of inward investment and act as a seedbed for regeneration and growth.

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Response to the HE Commission Degree Apprenticeship inquiry

The Higher Education Commission’s seventh inquiry is examining how Degree Apprenticeships (DAs) are being implemented. In 2015, the Government committed itself to overseeing the creation of three million new apprenticeships by 2020, and the development of DAs is seen as an important element of this policy. The reforms surrounding DAs, which combine workplace experiences with HE study, offer the opportunity for an apprentice to gain a full degree by the end of the apprenticeship.

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The Value of Degree Apprenticeships

Monika Antal, Executive Manager

Degree apprenticeships are an innovative means of widening access to learning, achieving higher-level and more work-relevant skills, and are therefore a crucial element in the drive to increase productivity. Degree apprenticeships also boost social mobility and underpin efforts to promote inclusion by enabling students to ‘earn while they learn’. They offer higher life-time earnings than most degrees, and can help narrow the employment gap between more affluent and less-advantaged graduates. They generate positive spill-overs for other degree courses and they are a vital mechanism for boosting parity of esteem between vocational and academic study. In summary, they are an excellent idea, and they are emerging at just the right time.

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