Unemployment figures are increasing marginally in the UK in line with a cooler economy not seeing growth. However, the real threat to our economy which needs to be addressed is employment inactivity which is also increasing more substantially than unemployment figures.
There can be many reasons for inactivity when it comes to the job market. More parents may be staying at home to care for children or elderly parents, perhaps more people are retiring because of early retirement schemes and there are potentially more people in education and further training. However, there are two reasons for inactivity which fit into the zeitgeist. There has been a rise in mental health with the BMA reporting that “Mental health services in England received a record 4.6 million referrals during 2022 (up 22% from 2019), with the number of people in contact with mental health services steadily rising.” The global pandemic and the subsequent cost of living crisis has undoubtedly affected the nation’s mental health which in turn affects their ability to work consistently.
The other reason for the inactivity is a general malaise at the situation that many find themselves in. There is a perceived lack of opportunity throughout many parts of the UK. That lack of opportunity can manifest in a lack of suitable employment for an individual but there also appears to be a disparity between pay expectations and employer affordability.
Peter Boolkah is a business coach with over 30 years of experience helping businesses to scale up and grow. He works with clients to ensure that they navigate tricky economies while still being able to grow their businesses. His work often looks at team building and ensuring companies have the right people for the right roles. “As part of what I do, I work with businesses to ensure they fully understand what roles are needed in their business to move forward and also how to recruit and successfully onboard the right people for those roles. Across most of my clients, we are finding that we have many applications for one role but few of those applicants are actually suitable for the role.”
Generally, though Peter says that many sectors are still seeing growth, in particular AI, technology and parts of the construction and engineering industries. “In certain industries, there are definitely more jobs than people, the question is why won’t people do those jobs?”
Economic inactivity has a profound impact on small business owners and entrepreneurs. The heightened impact of inactivity on our social welfare system will always have a knock-on effect on privately run businesses. It can affect their growth and have increased tax implications. The cost of living crisis means some small businesses in certain industries do not have the economic power to compete with their competitors in terms of wage expectations. Those small businesses are dealing with increased wholesale costs and overheads but are unable to put their prices up because customers cannot afford it, yet their staff want a wage increase to deal with the increased cost of living. Peter says it is a vicious cycle that many small businesses and entrepreneurs face at the moment.
“There needs to be a shift in how we view employment as a society. We need to be more realistic. We need to be thinking in terms of paying the bills rather than do we like the job. Sometimes in times of hardship, it becomes salient to simply find employment. This can lead to other opportunities within firms and your career taking a different path. What is not advisable is coming out of employment altogether. Being out of employment is a bit like coming off the property ladder, it is much harder to get back on.”
In terms of small businesses moving forward when it comes to hiring and employment, Peter says “Make sure that you are clear on your job role. What is the job and state clearly what will be needed to carry out that role, and what skills and experience are needed. Make sure you are looking and advertising in the right place for those employees. It is also important to know what your company values are and how they align with your employees. If you cannot compete with your larger competitors for staff in terms of remuneration ask yourself are there other areas you can offer incentives, for example, flexible working or staff wellbeing days?”
During this month we have seen interest rates remain static at their 14-year high. It remains to be seen when the effect of this will be seen on the economy. What is definite is that it is unlikely that it will have an impact on the next set of unemployment figures released on the 17th of October. Many feel those unemployment and inactivity figures will remain the same.
