Labour Market Changed ‘Forever’ says CBI

The principles of the labour market have changed forever post-pandemic, says CBI Director-General.

After a year of labour market shortages post pandemic, the CBI is arguing that business and the government need to stop fighting the same old war for talent and embrace a new set of principles to solve the ongoing people and skills shortages crisis.

In the opening speech of the CBI Future of Work Conference – sponsored by Mercer, Phoenix Group and BAE systems – Tony Danker, CBI Director-General, has set out his vision of the future of work by saying that “New realities demand a new approach. And if we as business leaders don’t start leading the change, we will end up chasing it.”

Danker argues that generational shifts, alongside the pandemic and longer-term trends are completely transforming the world of work. “We in Britain don’t have the workforce and the skills we need to prosper and grow. Why? Our demographics have changed. The population is ageing. And a generation in their 50s and 60s – with private pensions and property wealth – can take early retirement,” he said.

“We are suffering from a mental health epidemic. It is keeping many at home, and impacts many more still in work. More broadly, the pandemic has changed perspectives on the balance of work in our lives and the way we lead them. This means many may work still, but not like before. Meanwhile, in this country, political views on immigration have hardened. With politicians afraid to explain its benefits even in a world of massive labour shortages. And technology has evolved so fast, that 90 per cent of today’s workforce need to retrain by 2030. Yet our skills system is still operating in an analogue world – in so many ways.”

Danker has set out five new principles to boost productivity and overcome the ongoing labour shortage crisis:

1. The UK Needs a Childcare Revolution
◦ The UK has some of the highest childcare costs in the OECD, with public funding for childcare comprising less than 0.1 per cent of GDP – the second lowest investment in the OECD.
◦ The Government needs to boost funding for the existing childcare provision for three- and four-year olds and expand free childcare hours to cover one- and two-year-olds to get parents back into work.
◦ In England, the cost of a part-time nursery place for a child under two grew by 60 per cent in cash terms between 2010 and 2021 – twice as fast as average earnings. And it prevents parents from working, especially women who continue to carry the burden of caring responsibilities.

2. Wellness is becoming an Employer’s Job
◦ Over a quarter of those who are now economically inactive are out of the workforce because of long-term sickness. The cost of poor health to the UK economy is upwards of £180bn GDP, with around 131m working days still lost to ill-health annually.
◦ Employer-led health interventions, to prevent common physical and mental health risks, could help save £60 billion every year – reducing the impact of ill-health on the UK workforce by up to 20 per cent.

3. Flexible Working is becoming Mainstream Practice
◦ Research from Timewise, shows that nine out of 10 people want flexible work. But only three out of 10 job adverts offer it.
◦ The stats around part-time work are even starker – where the volume of people wanting to work part-time is outpacing available part-time jobs 4:1.

4. Skills Policy and Immigration Policy must finally be brought together
◦ Governments of all flavours have serially failed to have the most elementary approach to our labour market.
◦ We need to work smarter in upskilling and reskilling existing workers and attracting the best talent in the world. This means migrating the Apprenticeship Levy into a new Skills Challenge Fund, where businesses can invest in accredited training, for the variety of skills they know their people need − working alongside a cross-departmental approach to immigration policy.

5. Automation is our Friend
◦ AI across the economy could add an estimated £38bn to UK GVA in 2030, and SME adoption of digital technologies around £45bn.
◦ Research shows that we’re currently behind our competitors in Europe in innovating to work smarter. In fact, we’re right at the back of the pack, behind Italy, Portugal and everyone else.

Danker also set out three new principles for firms to get the best and brightest employees:

1. Your business must be progressive – with a small p – this is not about politics
◦ “Without strong societal values, a central sense of purpose, a commitment to better employee lives, and active diversity and inclusion strategies, you will lose the talent war,” said Danker.
◦ Younger generations are increasingly choosing where to work based on a firm’s behaviour to them and the world.

2. Work must become a Platform For a Better Life

3. Every Firm Must Strike a New Deal for the Workplace
◦ Danker believes business need to update their relationship with their employees to attract and keep the best talent.
◦ Businesses need to always be evaluating and evolving their offer to their employees and wider talent.

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