Happy new year and welcome to the latest Quarterly Overview. This winter edition of the overview covers the end of 2021 and the start of 2022.
The labour market remains tight, with vacancies high and applications low across the economy. Half of all businesses are having trouble recruiting the staff they need. Vacancies in the charity sector remain above their pre-pandemic levels. A small population plus more who are ‘economically inactive’, means there are around one million fewer people in the labour market than would have been expected on pre-pandemic trends. At the same time, vacancies are double December 2020 levels, and 50% above pre-pandemic levels. The effect of the large number of vacancies and shortage of those applying for them is that starting pay has hit record levels in many sectors.
One of the emerging trends across the reports covered this quarter is around flexible, remote, and hybrid working. The greater proportion of these types of jobs, brought about by the pandemic, means more people, especially mothers, are able to access jobs or work more hours. Charities that offer flexible and hybrid working are likely to give themselves the best chance of attracting applicants in the current market, though there are issues around discrimination that they should be aware of.
Work on the charity sector by NCVO and others provides ongoing insight. The most recent publication shows welcome stability in the sector. Over half of respondents were in the same financial position as the previous month, while nearly two in three expected to be in the same situation in the next month. When asked about their paid workforce in the previous month, half (49%) reported it stayed the same, a quarter (24%) said it increased and fewer than one in ten (9%) reported it decreased. More than half (56%) expect their paid workforce to stay at the same level, but many more expect to increase (21%) than decrease it (5%). This is likely to be linked to the 56% reporting an expected increase in demand for their services.
The UK’s economy has experienced a great deal of change during the pandemic. The initial bounce back stalled towards the end of 2021, even before the arrival of the Omicron variant. Shortages of staff and goods, plus rising inflation were behind the slowing growth.
Analysis from KPMG predicts growth of 1.8%-4.2% in 2022. They also highlight staff shortages as a problem for growth.
CIPD Labour Market Outlook
The latest Labour Market Outlook by the Chartered Institute of Personnel and Development (CIPD) shows employment confidence remaining high. Net employment balance (the difference between employers expecting to increase and decrease staff levels in the next three months) overall was +38, the highest figure on record, though many face recruitment challenges.
Nearly half (47%) of employers reported hard to fill vacancies, up from 39% in the previous report. One in ten employers were planning to make redundancies, the same overall figure as for the charity sector. In both cases this is down slightly on the previous quarter. While the number of applications to vacancies is down overall, this is largely driven by a drop in applications for low-skilled jobs, with medium- and high-skilled applications remaining largely unchanged.
For the charity sector, the net employment balance is +33, having grown rapidly in 2020 and 2021. However, the proportion of charities intending to recruit declined slightly, from 72% to 68%. Nearly half of charities (46%) had hard to fill vacancies. More than half of charities (55%) expect recruitment difficulties to get worse in the months ahead. On pay, the voluntary sector was predicting to offer pay rises of 2.0% on average, twice the level of the public sector and half a percentage point below the private sector.
According to the most up-to-date figures, 29.4 million people are employed in the UK. This is an increase of over a quarter of a million on the previous month, and over 400,000 up on the pre-pandemic number.
Not surprisingly, given the record number of vacancies, a third of charities in a recent survey reported that they are struggling to recruit staff.
The impact of the pandemic on the labour market has been mixed. Unemployment is only just above pre-pandemic levels, while long-term unemployment has been falling. Youth unemployment is below pre-pandemic levels. Instead of an increase in unemployment, ‘inactivity’ (neither working nor looking for work) has risen.
Job vacancies are at record levels and unemployment is low. Crucially, the number of unemployed people per vacancy is at the lowest level since the 1960s. The resulting labour shortages are showing no signs of easing. Economic inactivity is rising, with being in education the most common reason, but ill health has risen sharply and is now the highest since 2005. This reinforces the idea that flexible and hybrid working should allow charities to reach more potential applicants.
The overall labour market has, however, become smaller. Almost half a million people have left the labour market, meaning they are not working and not looking for work, such as those who are retired, in education, unwell or caring for another. As a result, Britain’s workforce is ‘smaller, younger and more female’. In part, this is because flexible and remote working has allowed the number of mothers of children under three in work to increase by more than five percent. The proportion of women in the workforce rose after the start of the pandemic, largely due to greater flexible working making more jobs accessible to those with caring needs. This again shows how offering flexible working can allow charities to tap into wider pools of possible applicants.
The Times has written about the ‘splintered jobs market’ in the UK, with recovery uneven across different sectors and geographies. The Times have also featured a piece about those who are on a ‘career break’. In the context of staff shortages and record vacancies, it discusses how employers can appeal to those who ‘quit the rat race’, suggesting a focus on flexible working and reducing language that puts off potential applicants. Nida Broughton, of the Behavioural Insights Team, said, “Phrases such as ‘recent graduate’ and ‘three or five years’ experience’ won’t attract older people, and nor will ‘innovative and adaptable’, Broughton said. “If you’re an older worker looking at that, you might just assume it means, ‘they don’t want someone like me’, when that may not be the case. You’re going to see bigger effects from nudging the employer side to do more to make sure the opportunities out there are attractive.”
The Great Resignation?
There have been multiple reports across different media of ‘the Great Resignation’. And, indeed, the number of people moving from one job to another as a result of resignation reached a record high in the period from July to September 2021.
Coverage of the ‘Great Resignation’ has included the Harvard Business Review on who is driving it. The World Economic Forum has highlighted that, far from being equal across all workers, resignation rates are highest among mid-career employees, and in the technology and healthcare industries, as well as retail, hospitality, and food services. One of the key drivers is the ability to work remotely, as employees can quit a job not offering remote working for one that does. As a result, the Economist has highlighted the importance of retention and what employers should consider to address the situation.
Despite the record number of vacancies, there has been no sign of a ‘great resignation’ in the UK. Instead, as many reports on this topic are based on asking whether people are intending to quit, it has been termed the ‘great contemplation’, as people review their working lives. Rather than ‘great resignation’, the BBC used the term ‘great reshuffle’ as workers move to other jobs for better pay, work-life balance, or to something more in line with their values, something charities should be well placed to take advantage of.
Kallidus is among those to highlight that half of current employees may look to change jobs in 2022, with the desire for greater flexibility and purpose the two most common reasons given. Charities should therefore be in a good position if this is the case.
While there is talk of upcoming resignation, data from last year provide insight into some people’s reluctance to change jobs, highlighting employees’ concern about whether their skills were transferable between different jobs and sectors.
ONS data on the vacancies in the UK labour market illustrates the rise in vacancies over recent months. Vacancies fell from 800,000 in December 2019-February 2020, to 340,000 in April-June 2020, before rising to above 1.2 million in the latest data.
Data from ONS and Adzuna show vacancies in most sectors stayed above February 2020 levels in December 2021, which is usually a quiet month. The charity sector has seen vacancies above that February 2020 level since late May 2021. In fact, vacancies have only fallen below that level in four weeks since then.
The chart below shows charity sector job adverts by Adzuna. The data are an Index with the February 2020 average = 100
Regular pay (excluding bonuses) grew 4.3% among employees in the period August to October 2021. However, adjusting for inflation, regular pay grew by just 1.0%. These figures are now more reliable, as the large changes in previous months have mostly dissipated.
The charity sector continues to provide for many people at this difficult time. The latest NCVO research shows that the pandemic has increased the demands on the sector, with over half of front line charities reporting an increase. This is slightly down on previous months.
Of those surveyed, half kept their workforce the same size, a quarter grew, and fewer than one in ten decreased. As many saw their finances improve as worsen over the last month, a quarter each, while the remaining half were stable. Despite the financial difficulties, only a tenth of charities expect to make staff redundant in the next year.
It may come as little surprise that Charity Commission research showed that more than 90% of charities have been negatively impacted by the pandemic. Eighty five percent had their ability to deliver services affected, 72% their financial position and 66% their staff and governance. Six in ten charities saw their income fall; a similar number were forced to cancel events or planned work. The same proportion ‘anticipate a threat to their charity’s financial viability in the next 12 months’.
The mixture of rising demand and funding constraints has been described as a ‘perfect storm’. Not surprisingly, many leaders are worried about the future. Three quarters of managers are concerned about stress and burnout in their organisation. Other work on the sector describes it as ‘never more needed, yet never more stretched’.
The average charity saw its income fall by 15% in the early months of the pandemic, with the most financially vulnerable losing 40%. This pattern was repeated in 2021.
October saw the delivery of a Budget by chancellor Rishi Sunak. The main points include money for levelling up and the UK Shared Prosperity Fund, funding for youth services, investment via the Levelling Up Fund, and a Community Ownership Fund. Further, the Recovery Loan Scheme was extended, and business rates were reduced.
Pay within the sector has come under scrutiny. The gender pay gap at a sample of 100 large charities has improved slightly from 11.2% in 2016 to 10.6% in the most recent data. Other work on pay in the sector shows that 17% of all charity workers earn less than the real Living Wage.
In other research on the sector, 83% of participants reported women having lower hourly pay than men. The research also shows three quarters of hours were worked remotely, though with significant differences across sectors. Voluntary turnover (staff choosing to leave) fell from 16% in 2020 to 12% in 2021, the lowest on record. Involuntary turnover rose from 4.4% to 5.5%, and recruitment fell, with respondents recruiting 22% of their workforce on average, down from 32% the year before.
New research gives some insight into recruitment of trustees. Reach Volunteering have concluded that ‘the candidates are there, the problem is how charities recruit’. One obvious improvement is using ‘open recruitment’, moving away from only recruiting through informal methods. Other research shows charities increasingly using social media to widen their pool of potential trustees. If your charity is recruiting, Post a free trustee ad now.
The impact of the pandemic has been widely varied, due to luck, the charity’s response, and various other factors. For many, digital transformation will be key, but is not a panacea.
NFPSynergy spoke to several charities about their experiences of the pandemic in their report, Gone Viral. It highlights how charities that were able to deliver their services digitally fared better, as have those whose funding relates to medical research.
The Royal Voluntary Service found that those who volunteered during the pandemic had better wellbeing, health and social connectedness than those who did not. In fact, volunteering could be ‘a powerful tool to help address health inequalities’.
BBC news carried a story about Joe Flynn, who went from selling mortgages to working at The Vegan Society, after seeing the opportunity on CharityJob. He says his new job is ‘really motivating’ and that he ‘thought I’d forever regret not taking the opportunity’. While he was concerned about the lower salary, ‘You can’t put a value on job satisfaction when you’re dealing with an organisation where the morals and ethics align with your own.’
There has been mixed news for the sector in terms of donations. Fewer are donating, but those who do donate are more generous. More than one and a half million fewer people gave to charity in 2020 compared to the year before, though the overall amount donated rose by around £700 million.
A third of those surveyed by PayPal said the pandemic has made them more generous with their charity donations. But fewer people are donating. In particular, it is the richest whose donations have fallen the most. The highest earners have been reducing the amount they donate to charity. Donations from the top 1% of earners fell by over 20% from 2011/12 to 2018/19.
The future of work
One charity in Scotland, the Scottish Men’s Sheds Association, is introducing a reduced working week. The SMSA will do reduced hours on a Wednesday to focus on wellbeing. Social care provider Community Integrated Care have introduced a four-day week. They wanted to make themselves a more appealing place to work while also improving the services they offer to their users. After fundamentally changing the way they work, they believe it has been a success, especially for productivity.
A study by Sonovate, reported in the Times, highlights that the pandemic has caused a change in attitudes. Now, many young people do not want to join employers that do not offer flexible working. The study again highlighted the importance of passion to many people’s career choices.
Equality, Diversity & Inclusion
The shortage of staff in the economy demonstrates the importance of being inclusive to all, and not putting potential employees off. The CIPD have produced Good Recruitment for Older Workers (GROW) with the Centre for Ageing Better and the Recruitment and Employment Confederation (REC). The guidance offers practical tips for reducing bias in recruitment that can apply to and help everyone.
Research from the Trades Union Congress highlights the pay and employment gaps faced by disabled workers. People with disabilities are nearly twice as likely to be unemployed as those without. Taking steps to appeal to these potential employees could give employers many more applicants to choose from.
Research from Durham University has highlighted the stresses that working parents face, and how flexible working can be a boost to productivity. Despite this, only a quarter of job adverts mention flexible working. Employers who do not mention flexible working are likely to struggle to attract employees, so this is a missed opportunity for many – especially as applicants often feel that asking about flexible working means they will be discriminated against.
The Fawcett Society is campaigning to end questions about past salaries. Applicants on lower previous salaries tend to get offered lower salaries in new roles. Making this change would benefit many disadvantaged groups such as women, ethnic minorities and people with disabilities.
Hays published a report on equity, diversity & inclusion in 2021 called All Talk & No Action?. They recommend improving data, communication, flexible working, and training.
The rise of flexible working has allowed more women to take jobs, raising the proportion of women in the workforce. Not only that, but around half a million women who were working part-time have switched to full-time since the start of the pandemic. Overall, mothers with young children gained the most—ten percent of mothers in relationships said flexible working allowed them to work or increase their hours.
The issue of flexible and remote working is not a simple one, however. Women working remotely may be disadvantaged, as those in an office are more obviously present and are rewarded for it. Rather than making the case against flexible and remote working, this shows the need for wider uptake of these measures, so they are not primarily just for those with caring responsibilities, who tend to be women. However, moves to flexible and remote working should be accompanied by updated training, policies, and procedures where necessary, rather than assuming what applied to office-based work can be applied unamended.
Hybrid and flexible working arrangements open up the possibility of discrimination claims, but there are steps that any employer can take to reduce their risk. Among these are adjusting decision-making, and processes around areas such as training and progressing, so that remote and flexible workers are not disadvantaged.
The past quarter has been another challenging one for the sector. Vacancies in the sector are above pre-pandemic levels, but are not at the record levels elsewhere in the economy. However, the numbers applying for these jobs remains lower than previously. As such it is vital that charities focus on making every aspect of their recruitment as open, welcoming and free from discrimination as possible. If charities are looking to recruit, one measure they can take is to embrace hybrid and flexible working, and to state clearly when recruiting the types of flexible working they are open to.
Tags: charity recruitment, charity sector, charity sector recruitment, diversity, diversity and inclusion, equality diversity and inclusion, finding the right people, flexible working, job market, quarterly overview, research