What's creating the talent shortage? – economia

Stay up-to-date with the latest business and accountancy news: Sign up for daily news alerts
Author: ICAEW Insights
Published: 27 Feb 2023
The UK has had an issue with skills shortages for some time, mostly within the manufacturing and engineering sectors. Since the pandemic, however, this problem has spread into other areas, from hospitality to professional services such as audit and accountancy. 
The post-pandemic skills and talent shortage is not unique to the UK, but certain factors – some well known, others less easy to define – have exacerbated the issue in the UK. David Smith, Economics Editor at The Sunday Times, can see a few influences that are adding to the UK’s talent woes. The most obvious of these is the reduction in EU migration post-Brexit. The Centre for European Reform’s research found that, after accounting for the gain of non-EU workers, the UK’s workforce has reduced by 330,000 since Brexit.
While that is a significant but not huge number, it has a disproportionate impact. Those EU workers tended to be concentrated in certain sectors, such as transport and storage, retail and manufacturing. They also tended to be skilled workers, and often progressed to more skilled jobs in business and professional services, says Smith: “They’ve often got good language skills, they’ve got a good education, so the entry job that they do is not necessarily the one they stay in. There’s an increased number of non-EU migrants coming to the UK, but they tend to fill different gaps in the workforce. And often, they will be recruited at some cost.”
When the current talent shortage started to become a problem, the UK seemed to have similar issues to other nations, such as the US. But while other territories recovered over time, the process seemed much slower in the UK, Smith explains: “The permanent workforce shrinkage that we’ve suffered in the UK seems to be unique. It’s not quite clear why that is, and it’s obviously causing a lot of concern and debate at the top of government. The Chancellor, for example, is thinking of ways of encouraging people back into work, particularly the over-50s.”
The over-50s are one of two age groups that have left the workforce in the greatest numbers. The other is those aged 18-24, who are either studying for longer, having had their education disrupted by the pandemic, or are taking longer to decide what they want to do with their lives and are prioritising social interactions over part-time jobs.
The over-50s are a bigger loss to the workforce, according to Smith. “The ONS has done some quite interesting research on this that suggests that it’s not mainly down to ill health,” he says. “There’s obviously a big ill-health component, but the rise in inactivity seems, for that age group, to be mainly voluntary. The pandemic brought a change in lifestyle that they didn’t particularly mind.” 
The change suggests that many over-50s have been in a position to retire early but had perhaps hesitated to take the leap – then the pandemic gave them the opportunity to try out retirement. The sudden increase in new technology within the average workplace may also have left some older workers feeling sidelined, says Smith: “I think it’s less natural and less comfortable to some older workers, if you’re permanently in hybrid working. It’s something that comes more naturally to younger people.”
The conversation about older workers has now shifted to how businesses might retain them. They have a lot of knowledge and experience that businesses currently need, says Smith: “They’re used to doing their day-to-day tasks and they can do them well. Losing those people, I think, has been quite damaging to a lot of businesses.”
Within this challenging situation, audit and accountancy has its own unique problems to overcome if it is to reach the talent that’s out there, because it is still fighting the perception that it is a ‘dull’ profession, says Andrew Walker, a partner at transformation consultants Oliver Wight. “The role of finance is very misunderstood,” he says. “Traditional finance was seen as a ‘necessary evil’ rather than the value-adding, decision-support business partner that I witness in some organisations today. The significant amount of qualifications required to become an accountant can also be off-putting. A-levels, a degree and then chartership is a big commitment, both emotionally and financially.”
Also, while finance roles used to be well rewarded compared with other professions, that’s not always the case any more, he says: “Talent is certainly in short supply, and business leaders are recognising that to attract key talent they will need to pay attractive packages – offering benefits beyond just the headline salary.”
Traditional ways of working are becoming increasingly less attractive to new talent, Walker adds. People don’t always understand the value that it brings to an organisation, he says. Budgeting, forecasting and month-end reporting can be perceived as arduous and time-consuming. It’s critical that the profession ramps up its modernisation, he says: “Organisations need to automate and/or digitise their reporting activity and look to utilise skilled finance resource to analyse the data and create decision-support capability – adding real value to the process.”
Finally, it’s always been the case in professional services that people work long hours, and in audit it also involves a lot of travel, says Smith. “Auditors are worked very hard when they’re young and when they get older, if they’re not a partner, they haven’t progressed much beyond where they were when they started. So if they’re leaving in droves, they’re leaving because they aren’t getting enough satisfaction out of the work.” 
This pattern is repeated across all professional services firms, he says: “I don’t want to get into cod psychology, but the pandemic perhaps opened up to people that there’s a different way of living and earning. We discovered this as a society during the pandemic. Attitudes towards work have changed as a result. Within this, there is a message for professional services firms: how do you deal with this change in attitude? How do you make people feel appreciated? That’s critical to attracting and keeping the talent you need.”
Businesses around the UK, and the rest of the world, are experiencing a talent shortage. In this context, is the profession representing the value and benefits that it offers to talent in the best way? Perception, purpose, diversity and development all matter in bringing the best people to the profession.
Solve your organisations’ recruitment, retention and succession planning challenges with ICAEW apprenticeships.
Train the next generation of ICAEW Chartered Accountants. Train the next you. Become an Authorised Training Employer today.
Chartered accountants don’t just spend their lives confined to their desks. They sit on the boards of multinational companies, advise governments and support charities and businesses.
The Institute of Chartered Accountants in England and Wales, incorporated by Royal Charter RC000246 with registered office at Chartered Accountants’ Hall, Moorgate Place, London EC2R 6EA
Read out this code to the operator.


Leave a Comment

Your email address will not be published. Required fields are marked *