Workforce exodus piles pressure on businesses - Chamber

The West Midlands labour market has been hit by an exodus of workers since the pandemic - causing major skills shortages across the business sector.

New regional labour market statistics reveal significant numbers of West Midlanders quitting the workforce over the past year is exacerbating the skills gap.

Emily Stubbs (pictured), senior policy and projects manager at the Greater Birmingham Chambers of Commerce, has now called for employers and stakeholders to work together and invest in training initiatives and more flexible working practices to reverse the trend.

She said: “The significant number of West Midlands residents leaving the workforce over the past year is exacerbating skills shortages and recessionary pressures on local businesses.

“This follows trends seen in the national labour market earlier last year. Employers and stakeholders must work together to invest in training and upskilling, and think creatively about job flexibility to encourage talented individuals to return to work.

“Greater Birmingham Chambers of Commerce are also working with Coventry and Warwickshire and Black Country Chambers to deliver a Local Skills Improvement Plan for the West Midlands.

“The West Midlands LSIP seeks to develop understanding of the green and digital skills needs of local businesses, to ensure that employers are at the heart of local skills systems, facilitate direct and dynamic working arrangements between employers and providers and ultimately shape the future of skills provision across the region.

“As part of the research process, we are currently reaching out to local employers via a series of focus groups in areas of growth identified by the West Midlands Combined Authority. We highly encourage local firms to get involved to inform this critical piece of work. ”

Meanwhile, wages in the West Midlands grew at the fastest rate since the height of the pandemic over the autumn months - but the trend was offset by spiralling inflation.

Labour market statistics show that the growth in average total pay (including bonuses) and regular pay (excluding bonuses) among employees stood at 6.4% in September to November 2022.

For regular pay, this is the strongest growth rate seen outside of the coronavirus pandemic period. Average regular pay growth for the private sector was 7.2 per cent in September to November 2022, and 3.3 per cent for the public sector. Outside of the height of the coronavirus pandemic period, this is the largest growth rate seen for the private sector.

But in real terms (adjusted for inflation) over the year, total and regular pay both fell by 2.6 per cent. This is slightly smaller than the record fall in real regular pay seen in April to June 2022 (3.0 per cent), but still remains among the largest falls in growth since comparable records began in 2001.

Figures also reveal that in the period September to November 2022, the employment rate in the West Midlands was 74.5 per cent, having declined by 0.1% since the previous three months (June to August 2022).

Unemployment was 4.3 per cent, 0.4 per cent lower than the previous quarter, while economic inactivity was 22.0 per cent, having risen by 0.5 per cent.

Compared with the same period a year prior (September to November 2021), in September to November 2022 the employment rate in the West Midlands fell by 0.5 per cent, unemployment fell by 0.3 per cent and economic inactivity rose by 0.7 per cent.

Across the country, the employment rate remained at 75.6 per cent in September to November 2022. Unemployment rate was 3.7 per cent, slightly (0.2 per cent) higher than the prior three months, and economic inactivity was 21.5 per cent, having declined by 0.1 per cent.

Compared with the same period a year prior (September to November 2021), in September to November 2022 the employment rate had risen by 0.2 per cent, unemployment had fallen by 0.4 per cent and economic inactivity had risen by 0.2 per cent.

Meanwhile, the number of vacancies in October to December 2022 was 1,161,000, a decrease of 75,000 from July to September 2022. Despite six consecutive quarterly falls, the number of vacancies remains at historically high levels.

The fall in the number of vacancies reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment.