How to navigate skills shortages and high confidence in 2024

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The economy may be uncertain, but employee confidence is sky-high. UK workers feel secure in their ability to progress and find new opportunities partly due to the ongoing skills shortage. Businesses are confident in their prospects and plan to increase headcount to support growth in 2024. The result is a tight labour market where demand outstrips supply.

Data gathered for the recent Robert Half Jobs Confidence Index (JCI) has revealed rampant skills shortages, wage growth above inflation, and unusually high jobs and business growth confidence. The insights, gathered in partnership with the Centre for Economics and Business Research, are part of the most authoritative report on key socio-economic factors influencing the UK labour market.

And in this blog Kris Harris, Robert Half’s Regional Director, UK Technology Solutions, looks at what the latest worker confidence metrics mean for the labour market and how companies can navigate the UK skills shortages by attracting and retaining the talent they need to support their growth plans. This deep dive will examine why businesses and workers have such a positive outlook despite the economic uncertainty, the impact of this, and what can be done to mitigate it.

Read: Robert Half Jobs Confidence Index

Worker confidence has seen a mild decline in Q3 2023, with more than half (58.4%) of JCI survey respondents saying they feel confident about their job looking ahead to the next six months. This is only marginally lower than the 60.0% recorded in the previous quarter, which represents an incredibly strong score considering the economic circumstances.

Employees are confident in their career progression prospects, too. The JCI pillar measuring job search and progression confidence climbed by 14.4 points in the quarter, reaching 46.8 — its highest reading since Q4 2019.

Extensive skills shortages combined with a strong demand for talent have left many workers feeling confident in their ability to find a new role if they had to. With data for the Robert Half 2024 Salary Guide revealing planned permanent headcount increases for 47% of UK employers in 2024, this confidence is not misplaced.

Businesses are confident in their growth prospects for 2024. Over two-thirds (69%) of business leaders surveyed for the 2024 Salary Guide feel ‘much more, or somewhat more confident’ about their growth prospects for the next 12 months. Increased product/service demand, expanding opportunities, and successful restructuring are just some of the factors driving this confidence.

Despite high hopes for their growth prospects, three-quarters of businesses are concerned about their ability to attract and retain skilled talent in 2024. This is exacerbated by the quantity of new roles many employers plan to hire for in the next twelve months.

The current skills shortage isn’t being driven by more than just candidates without requisite skills; there are also fewer candidates on the market. With talent in such short supply, the skills shortage is not just staying stable — it’s actively growing. So, why is this happening?

Skill shortages are systemic and take time to remedy. This is especially true now that the speed of innovation is outpacing traditional learning routes, on top of the labour market challenges presented by Brexit, the Great Resignation, and the pandemic. By focusing on the ‘known’ in-demand skills for each sector in the coming months, businesses can give staff learning and development opportunities while systematically closing team skill gaps.

Accounting and finance

Financial modelling

Data analytics

Digital proficiency

IT and Technology

Cloud (AWS/Azure/GCP)

Dynamics/NetSuite/SAP

Python/SQL

Marketing and creative

CMS

Marketing automation tools

SEO

Administrative, HR, and office support

Human resources information system (HRIS)

Compensation and benefits management

Budgeting

High employee confidence and a high-demand, low-supply job market could push salaries up. Our data reveals that 22% of employers don’t feel able to offer more competitive salaries over the next twelve months. With such high worker confidence and employers unable to negotiate, businesses risk losing headcount. So, what can they do?

We advise adding more nonfinancial benefits to remuneration packages to retain and attract quality talent. Salary Guide data showed that workers are far more interested in benefits which ease the cost-of-living and help them perform well in a hybrid work environment.

Benefits workers want in 2024

Meal vouchers

Paid sabbaticals

Fuel assistance

Ticket for public transport

Childcare vouchers

Workers are also interested in benefits which support their health and care. These include dental insurance, stress reduction programmes, and hospitalisation insurance. Giving benefits like these can foster a top-down culture of care, thereby improving morale and making employees feel more valued.

In his Autumn statement, the Chancellor announced the Back to Work Plan, which aims to support long-term unemployed individuals as they return to work. The plan focuses on improving how unemployed individuals interact with the benefits system. On top of this, the Government plans to dedicate £50 million in funding for apprenticeships in growth sectors over the next two years.

Although these initiatives are much welcomed, we must acknowledge that there simply isn’t enough talent to fill the nearly 1 million vacancies in the UK labour market. To successfully tackle such widespread systemic skills shortages, industry, academia, and government must join forces.

Limited access to skilled talent is a double-edged sword for UK workers. Although it gives them the upper hand when negotiating a higher salary or better benefits, it also increases their risk of burnout, as smaller teams could be expected to support growing business demands without the necessary additional permanent headcount for extended periods.

Flexible resources like contract and temp professionals offer employers a way to support core teams while giving them access to skilled talent they can learn from. Our Salary Guide data shows that 41% of employers plan to continue working with freelance talent, 43% will continue working with contract talent, and 49% will continue to rely on project outsourcing in 2024.

The year ahead may be uncertain from an economic perspective, but with creative benefits packages and flexible hiring, companies can attract talent to support their growth plans. The future looks bright for those focused on developing their people.

For more insights on worker confidence, download your free copy of the Jobs Confidence Index here. Download the Salary Guide here to learn more about salaries, benefits and hiring for 2024. If you want to discuss the future of hiring within your business, contact your local Robert Half team today.

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