Labour Market Disconnect in the West Midlands

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In this blog, Dr Juliane Schwarz summarises the key issues on why there are currently high levels of unemployment in the region, whilst at the same time, record numbers of vacancies for jobs and apprenticeships.

View the full policy briefing on the labour market disconnect.

The research is a response to a query by the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP) board and produced in partnership with GBSLEP and WMREDI.

Nationally and internationally there seems to be a disconnect between high levels of unemployment and a record number of vacancies for both jobs and apprenticeships since the post-lockdown opening of the economy. Reasons for this are not always clear; rather they are complex and interrelated. To understand this labour market imbalance it is important to consider the following four points.

  1. The Scale of the problem
  2. The jobs on offer
  3. Workforce (not) on offer
  4. Routes to bridging the gap

This current labour market imbalance is expected to ease over the next 12 to 24 months, although it is not expected to disappear altogether for some time. Whilst this problem isn’t unique to the UK, it is likely that Brexit has exacerbated some of the problems.

The scale of the problem 

Jobs vacancies: growth in nearly all industries from July to September 2021. The current overall ratio of vacancies is the highest on record. Higher level of vacancies than pre-pandemic might indicate that employers’ needs have quickly returned to pre-pandemic levels, but the workforce hasn’t returned to that level (yet)? However, economic inactivity and unemployment rates are projected to keep increasing throughout 2021-2023. As an effect of the pandemic, women, young people, the BAME community and lower earners are most at risk of unemployment. This might need to be considered in recovery measures.

Table 1: Quarterly growth in vacancies by sector compared to pre-pandemic data January – March 2020 in the UK
Jobs on offer

Key changes impacting the profile of jobs on offer include:

  • Changes in business models, e.g., online shopping shifted retail jobs away from the highstreets towards warehouses; increase in automation, affecting entry-level and low skilled jobs.
  • Skills shortages and skills mismatches: automation, digitalisation and demand for a higher qualified workforce.
  • Reliance on certain industries and at-risk sectors, e.g., automotive manufacturing.
Workforce (not) on offer
Obstacles to re-entering the workforce include:
  • Lack of confidence.
  • Change in skills required.
  • Non-awareness of opportunities.
  • Women, young people, the BAME community, low earners and older workers are relatively less likely to move back into the labour market as they are more affected by the pandemic.
  • Caring responsibilities.
  • Physical and mental health.
  • Lack of work experience during the pandemic.
Reluctance to move into new employment in times of economic insecurity effects:
  • Sectors most affected by lockdown, such as hospitality and retail. Employees might have found alternative employment with better conditions.
  • Job moves – people tend to stay with the job they have at times of greatest economic insecurity.
  • Moving into employment – jobs might not be secure and in the case of failure, there would be neither income nor benefit payments.
Issues faced by people returning after long-term unemployment and/or furlough:
  • Fewer entry-level jobs with low-level skills are less in demand and digital or advanced digital skills are increasingly necessary to secure a job.
  • Unawareness of apprenticeship schemes or opportunities of employment in new sectors.
Figure 1: Predictions of the Percentage of the working-age population that is unemployed from 2019 to 2040. Source: Oxford Economics Model
An increase in physical and mental health barriers to employment:
  • Lack of confidence returning to work after furlough or long-term unemployment
  • Long term health issues related to the pandemic, e.g., Long Covid, mental health issues relating to grief, loss, lack of social interaction.
Skills shortages and skills mismatch:
  • New technology requires new skills by employees
  • Higher demand on high qualifications
  • Implications of the EU exit and changing immigration policy on less desirable vacancies, agriculture, HGV driver, abattoir workers.
  • Reduced flexibility of employers to recruit in particular at the lower end of the labour market.
Routes to bridging the gap
Career information, advice and guidance
  • Career information, advice and guidance, as well as information on benefits and training, need to be a key part of the response to the COVID-19 crisis.
  • One-stop-shop in careers advice especially for young people.
Support for employers
  • To avoid miscommunication between employers and job seekers – need for employers to advertise opportunities in language, and via channels, that jobs seekers use.
Government incentives
  • Kickstart programme
  • Apprenticeships
Increasing the range and availability of training opportunities
  • Construction workers and HGV drivers
  • Digital Bootcamps

For a more detailed analysis, please view the full policy briefing – Labour Market Disconnect.

The research was commissioned by the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP).

This blog was written by Dr Juliane Schwarz, Research Fellow, City-REDI and WM REDI. Juliane is currently on secondment at the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP).

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.

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