The megatrends shaping the future workforce

“The question that faces the strategic decision-maker is: ‘What do we have to do today to be ready for an uncertain tomorrow?’”

So said Professor Peter Drucker in 1974. Nearly half a century on, the words of this highly influential management guru remain relevant to every business leader navigating the UK’s tough trading environment.

Amid successive plot twists – from Covid-19 to the cost-of-living crisis and the rapid rise of generative AI – companies must rethink how they build and optimise their workforces for an unknowable future. There is no trusty map to guide their HR, but there are clues as to the required direction of travel. They take the form of five linked megatrends that talent advisory and solutions company Adecco has identified from its extensive research with employers and employees.

1. Economic and political uncertainty 

Brexit, Covid-19, the Ukraine war, fuel shortages, five prime ministers in six years, spiralling inflation and an approaching general election. We’ve been living and working through economic and political uncertainty and will continue to do so.

With the UK facing stagflation – that pernicious mix of fast-rising prices and weak GDP growth – into 2024, the tough economic conditions make it hard for employers to predict their staffing needs.

The labour market has been turbulent since the Covid crisis, with a jobs boom in 2021 followed by a slowdown after the disruptive mini-budget of September 2022. While there has been a small increase in candidate availability this year, because of the dual scourges of redundancy and recruitment freezes, talent shortages remain.

“What we’re seeing is not so much a people mismatch as a skills mismatch,” reports Niki Turner-Harding, senior vice president, Adecco UK & Ireland.

Businesses inclined to delay hiring until conditions improve should factor in a finding from Adecco’s 2023 research How Megatrends are impacting the world of work, which found that almost half (46%) of large employers in the UK anticipate increasing headcount by 2025. Competition will only increase.

 

 

2. Talent scarcity

More than a third (36%) of large employers are finding it difficult to fill vacancies because candidates have become more hesitant about moving jobs while the economy continues to struggle. And 80% say that the cost-of-living crisis has limited their ability to recruit. Reduced access to EU-based candidates since Brexit is also a significant problem (cited by 23%).

Other factors have played a part in this ongoing situation. They include the UK’s ageing workforce, a steep rise in economic inactivity and the continuing shortage of skills (particularly digital, ‘green’ and interpersonal), with 61% of large recruiters citing this as a serious challenge.

Resolving the situation will require a concerted training and development push, an emphasis on retention and an effort to persuade back to work some of the many over-50s who took long-term sick leave or early retirement during the pandemic.

At the other end of the spectrum, many people aged 18 to 24 are delaying their entry to work, taking gap years or continuing education.

“About 8.7 million people are economically inactive across the UK,” reports Rachael Boyes, head of market insights, Adecco UK & Ireland.

Almost two-thirds (62%) of large employers are trying to persuade older people back into work. Given that 39% aren’t seeing the skills they need from education-leavers, they’re understandably keen to attract any potential returners who can share knowledge with their younger colleagues.

But poor employee wellbeing may scupper plans without urgent action, according to Boyes, who notes that “2.6 million people are not working because of long-term sickness. More than half of them have mental health conditions such as depression and anxiety. This signals the importance of providing employee assistance and wellbeing programmes – or simply reassessing certain leadership styles.”

3. Changing ways of working

A core means of attracting both older and younger people into the workforce, while enhancing wellbeing, is a focus on flexibility. A preference for hybrid working has been noted among UK employees.

The way we work has changed fundamentally since the Covid crisis, accelerated by the digital transformation of business. As part of this, people expect a better work/life balance – and many already have it.

Adecco’s latest Global Workforce of the Future research reveals that a quarter of employees can choose their hours, while 30% wouldn’t take a job if it didn’t allow remote working.

“Where employers can offer a level of flexibility, they open themselves up to higher-skilled workers who might otherwise be constrained by their caring responsibilities or locations,” notes Sandeep Bhandal, the group’s vice-president of marketing, insight and social impact in the UK and Ireland.

In any case, legislation that’s set to take effect in Q2 2024 will make flexibility less of a perk and more of a staple in the UK. Under the Employment Relations (Flexible Working) Act 2023, employees will be legally entitled to make two flexible working requests in each 12-month period. They will also have the right to ask for flexible working arrangements from day one in a new job.

This signifies that the traditional nine-to-five model is no longer the only viable option for workers and businesses. There is already a distinct shift towards project-based work and a thriving gig economy, with freelance contractors considered a key part of the workplace. Adecco’s research also finds that of the UK workers surveyed, nearly a quarter of people (23%) looking to change jobs in the next 12 months said their main reason was to start their own business, with a further 8% wanting to go freelance.

4. Digital transformation

Opening up the recruitment market through different ways of working may partly counter the severe shortage of skills needed to see through the digital transformation of business.

Two-thirds (67%) of large employers are experiencing big shortages of IT skills, particularly in data analysis and the use of AI. But, at a time when 40% of UK jobs could feel some impact from generative AI, according to a recent estimate by KPMG, complementary ‘human’ skills also require significant investment.

Boyes explains: “If people have core skills such as adaptability, creativity and problem-solving, they can transfer from one job to another as organisations and roles change.”

The fact is that many jobs of the future are unknowable. Nearly half (45%) of large employers believe that most roles they’ll be hiring for in 2030 don’t exist today.

This is precipitating a trend towards organising work around skills rather than jobs, according to Boyes, who adds: “We advise our clients to map for skills rather than job titles. If you’re hiring for skills, you’re future-proofing your workforce.”

5. The rise of purpose-led businesses

Investing in employee development is a vital part of retention. People understand that they must future-proof their skills. And, while seeking a larger pay packet remains the biggest motivator for jobseekers (cited by 36% of respondents), the desire to find meaning in work is also ascending the list of priorities.

As Bhandal says: “Employees want to be in a position where they can contribute to positive change through the corporate strength of their organisations.”

Younger workers in particular expect employers to consider people and the planet along with profit when making commercial decisions – and to shape their business strategies around purpose. They also want to derive a sense of personal value from their work.

While 73% of large employers recognise that their organisation’s purpose plays an important role in staff retention, 24% admit that their values largely don’t align with candidates’ expectations. Well over a quarter (29%) rate addressing their employees’ need to feel a sense of purpose as one of the top three items on the HR agenda.

But employers should note that adding a few well-crafted promises to mission statements will not suffice. Authentic messaging, consistent behaviour and ample opportunities for participation will be key.

The Covid crisis made people aware that more flexible and meaningful ways of working are open to them – and there’s no turning back.

If change is the only constant in the world of work, talent scarcity is along for the ride. Factors such as an increase in economic inactivity, especially among over-50s, and the recent tightening of immigration rules have combined to shrink the pool of talent that UK recruiters can trawl in recent years.

The small uptick in candidate availability this year – caused largely by a burst of redundancies as the cost-of-doing-business crisis wears on – won’t change the overall picture. Not least because 46% of large employers in the UK expect to increase their headcount by 2025, according to recent research by Adecco.

Through separate surveys of employers and employees, the talent advisory and solutions company has identified talent scarcity as one of five megatrends affecting UK plc – and threatening its ability to compete globally.

The big skills mismatch

Adecco’s How megatrends are impacting the world of work survey has found that 36% of large employers are struggling to find suitable candidates because people have become hesitant about moving jobs, possibly fearing that a potential new employer might have a 'last in, first out' redundancy policy. And 80% say that the cost-of-living crisis has reduced their ability to recruit, putting a squeeze on the rewards they can offer.

But these indirect effects of a flatlining economy are not the fundamental cause of labour shortages. The biggest factor is the growing mismatch between the skills on the market and the capabilities that employers require to thrive in the fourth industrial revolution. With perpetual advances in technology – particularly in AI – comes a never-ending need to develop new skills.

These are in short supply: 61% of large employers cite ongoing skills shortages as one of their main recruitment challenges. Most in demand are digital, ‘green’ and interpersonal skills. The emphasis of many roles is likely to shift towards uniquely human qualities, such as emotional intelligence.

Hiring for skills, rather than jobs 

Adding to the problem, 45% of large employers believe that most roles they will be hiring for in 2030 don’t exist today. Many are therefore starting to organise work around skills rather than jobs, hiring for the ability to learn (versus qualifications and experience) and identifying skills gaps among their workforces.

They can plug some gaps by using the increasing number of freelance contractors who are operating in the so-called gig economy. Businesses are considering their HR requirements in an increasingly holistic and flexible way.

But 33% of large employers consider the need to train their workforce to be one of the top three barriers to meeting their resourcing requirements, with 57% admitting that they need to improve reskilling programmes. More than half are planning to strengthen career development schemes, including apprenticeships, support for professional qualifications, mentoring and cross-functional training.

When designed around outcomes, about three-quarters of completed reskilling programmes are economically positive – delivering productivity increases of up to 12% per worker, according to research by McKinsey & Co.

Building from within should be the priority for business leaders, advises Sandeep Bhandal, Adecco’s vice-president of marketing, insight and social impact in the UK and Ireland.

“Good people who work hard are already connected to your core values, culture and how you operate,” he explains.

Offering these people ample learning and development (L&D) opportunities is also key to employee engagement and retention – a crucial factor in addressing talent scarcity.

“Nearly 50% of workers looking to leave their role in the next 12 months would do so because of a lack of progression, investment in their skills development or not utilising all of their skills set,” reports Niki Turner-Harding, senior vice president for Adecco in the UK and Ireland. “Investing in people will foster loyalty because you’re showing them that they’re meaningful to your company.”

Almost two-thirds (64%) of the large employers covered in the survey offer their staff personal L&D budgets.

Participation puzzle

But L&D is, of course, only one factor that binds people to organisations. While seeking a higher salary remains the number-one motivator for finding a new employer, salary ranks only ninth among employees’ reasons to stay with a firm. Instead, the desire for employers to offer flexible work, a sense of purpose and an emphasis on wellbeing feature highly on their wish lists. Employers need to focus on this priority list and, if necessary, act accordingly.

Since the pandemic, flexible working – strongly sought by workers of all ages – has become a vital part of the attraction and retention toolkit. Adecco’s latest Global Workforce of the Future research reveals that the lack of freedom to choose working patterns is a deal-breaker for 27% of candidates.

Initiatives such as hybrid working, compressed hours or a four-day week also help potentially excluded groups – for instance, people with disabilities or caring responsibilities – to juggle work and life. As such, flexibility and a focus on wellbeing may be integral to solving the ‘participation puzzle’, widening the talent pool.

According to the Office for National Statistics, 8.7 million people are economically inactive in the UK, including 2.6 million on long-term sick leave.

For example, large numbers of people aged 50 to 64 left the workforce prematurely for health reasons or early retirement. The hope is that they can be lured back with roles that provide a better work/life balance, opportunities to reskill and a means of boosting their income as the cost-of-living crisis wears on.

Earlier this year, the Institute for Fiscal Studies reported a “sharp and statistically significant uptick” in the number of older workers rejoining the workforce – presumably for financial reasons.

“Our research shows that 62% of large employers are aiming to attract older workers,” Bhandal notes. “They see value in their experience, expertise and diversity of perspective. A generational blend is key to a balanced culture. Older workers can also help with the transfer of knowledge. They have technical skills to pass on and also ‘soft’ skills that young professionals may not have developed during the rapid move to remote working.”

Since 39% of large employers aren’t seeing the skills they need from education-leavers, mentoring schemes may prove a vital productivity tool.

Many 18- to 24-year-olds are taking gap years or continuing education until the outlook improves. Others are going freelance or becoming entrepreneurs. Luring these people into employment may entail offering them extra incentives such as contributions to student loans (28% of large employers expect to offer this benefit by 2030). 

Changing our perception

Efforts should also be made to bring so-called discouraged workers, who believe there are no suitable roles available for them, back into work, says Bhandal.

"People in this group may require basic training and targeted communications," he explains. "This is all about how employers engage with marginalised groups to make them aware of the opportunities available. But perhaps the biggest change required is one of perception: talent shortages persist not because the talent isn’t out there, but because that talent isn’t being fully recognised and utilised. With interventions from educators and government, and a sustained effort from employers, there is a chance to develop the kind of workforce that UK plc needs if it’s to thrive on a global stage”.

The search for purpose at work has become increasingly important since the pandemic. New ways of working, the desire for a better work/life balance and a growing focus on business’s role in society mean that both employees and employers are prioritising purposeful work like never before.

Take the great resignation, for instance. Buoyed by their experience of life beyond the nine to five, UK workers quit their jobs in record numbers from Q3 2021 to Q4 2022. For many, a key factor was a sense that their work no longer aligned with their personal values. They wanted more than just a steady job and a regular income.

In a world where work is a subset of life rather than separate from it, it’s becoming clear that employers have to treat their employees as people, not simply workers.

Intentional action

So, what have employers learnt? Research by Adecco in the UK has found that 73% of large employers believe that their purpose and values play a significant part in staff retention. Conversely, they also found that 22% of employees are looking to change jobs in the next 12 months because they don’t find their work meaningful enough.

“The trajectory for purpose has been on a steep incline, with Covid-19 acting as a catalyst,” says Rachael Boyes, head of market insights, Adecco UK & Ireland. “When more than a fifth of employees want to change jobs, that brings the importance of purpose home to employers. People with a sense of purpose are happier, more resilient and more successful, which translates to greater productivity.”

When it comes to redesigning an organisation’s purpose, there is no quick fix. Authenticity, trust and communication are key components, but walking the talk is vital. Without action, values become meaningless.

“If organisations say they’re going to do something and then don’t, it destroys the employee experience.”

So says Sandeep Bhandal, vice-president of marketing, insight and social impact for Adecco in the UK and Ireland. He argues that any work on organisational purpose has to be “intentional”. This means that, when a business commits to a particular value, it must act accordingly. Having clear structures, pathways and measurable outcomes helps to ensure this.

“Purpose initiatives need to be endorsed and driven (but not forced) by the company,” Bhandal says. “They must come from every level of the organisation. Then you put the right framework in place by getting various departments to take ownership and support those who are passionate enough about the subject to speak out.”

Bhandal also recommends learning from, and aligning with, like-minded businesses, citing the example of Adecco’s partnership with the Social Mobility Pledge. Founded by former education secretary Justine Greening, this campaign group works with the government, businesses and educators to create fairer routes into employment – a key value for Adecco.

Creating an authentic purpose

At a time when businesses are struggling with skills shortages, inflation and the challenges of hybrid working, it could be easy for their leaders to ignore the power of purpose. But Adecco’s research suggests this isn’t the case, with 29% of organisations placing the need to tackle employee purpose at work as one of the top three items on their HR agendas.

What is a challenge is knowing where to start, as Boyes notes: “Creating a strong corporate purpose is not an easy thing to do but there is a real sense in business that it needs to be done.”

She advocates using a framework proposed by former Best Buy CEO Hubert Joly in his 2021 book The Heart of Business. This places people and purpose at the centre of business, with profit seen as an outcome rather than a goal.

“The way it’s positioned is that your organisational purpose sits at the intersection between what the world needs, what employees are passionate about, what the company is uniquely good at and how the business can create value,” Boyes explains. “A starting point is to use focus groups, feedback and design thinking to determine where you sit in each of these areas. These are the building blocks for redesigning your organisational purpose. Once you have your framework, you communicate it to the business and gain more feedback. It’s an iterative process: you hear, you act.”

A truly authentic organisational purpose must focus on people as much as it does on profit. Employees need to know how they can play a part in developing a business, so that they can get a sense of personal purpose alongside the corporate one.

“Our values haven’t changed, but how we interpret them to provide value for our employee network has,” says Niki Turner-Harding, senior vice president, Adecco UK & Ireland. “This is about ensuring that we cater for what our employees need alongside what we stand for as a business.”

 

The rapid advance and uptake of technologies such as AI and the cloud in business are fundamentally disrupting how, where and even when we work. Employers are transforming their business models and processes to keep pace with such developments, but alongside this comes the need to ensure that their employees have the appropriate digital skills.

For an idea of the scale of the training intervention required, consider the OECD’s recent estimate that technological change will transform about one billion roles – about one-third of all jobs in the world – before the end of this decade.

“It’s forecast that digital transformation could grow the UK economy by more than £413bn by 2030,” says Alexeis Garcia-Perez, professor of digital business and society at Aston University. “But, despite the accelerating digital transformation, persistent gaps in digital literacy across the workforce threaten the country’s long-term competitiveness.”

He cites a recent study by Future Dot Now, an industry-led group working to improve the population’s digital skills, as evidence that more needs to be done across society. Its research has found that almost 60% of the UK workforce (about 23.4 million people) cannot perform all 20 digital tasks that the government has defined as essential for work.

“As we make the transition to a knowledge economy and jobs are transformed by technology, employees who lack the adaptability enabled by digital fluency risk structural unemployment,” Garcia-Perez says. “For businesses, this would represent a challenge to recruit, execute new strategies and keep pace with change. Investing to cultivate a culture of continuous learning and to improve access to digital skills is therefore key.”

The role of business

While almost all businesses understand the need to develop their employees’ “digital fluency”, it’s hard for them to plan exactly what combination of skills they’ll require in the medium to long term. Indeed, 45% of UK employers believe that most vacancies they’ll be trying to fill in 2030 don’t currently exist, according to a recent survey of business leaders by Adecco in the UK.

Dealing with this challenge requires rethinking our approach to talent management. With the demand for tech skills far outstripping the supply, employers are increasingly looking to upskill existing employees and target under-represented talent pools with digital training. Take banking giant JPMorgan Chase, for instance. In 2019, it committed $350m (£290m) to a training programme aimed at preparing itself for a digital future. This included piloting new courses in tech skills and establishing partnerships with colleges.

Dr Antonio Weiss is an expert in digital public services and the author of the 2022 book The Practical Guide to Digital Transformation. He believes that many firms could – and should – be making it easier for their employees to pick up the skills they require.

“Digital skills development needs to tie into the day-to-day work of staff. If it’s separate, the skills won’t be embedded as easily.” Weiss says. “And, when deploying new software or hardware, employers should look to solutions that are well attuned to the digital skills of their workforce. Anything that requires significant training probably isn’t an appropriate solution.”

Long-term strategy

He stresses that employers need to be tuned into wider changes in the digital world so that they understand the human impact of new tech. Moreover, any transformation project must focus on the specific needs of the business, rather than being driven by the latest technological trend.

“Leadership teams need to be digitally curious and serve as role models in this respect. They should set a digital skills ambition that is appropriate to their sector and driven by their strategic goals, rather than the latest digital fads,” Weiss warns.

Garcia-Perez argues that more coherent and joined-up planning by stakeholders at all levels is vital if UK plc is to meet the challenges posed by the digital transformation of business.

“Targeted strategies and coordination between governments, employers and educators are required to digitally prepare the workforce,” he says. “Apprenticeships, vocational programmes and knowledge-transfer partnerships that develop digital skills must be expanded.”

Employers must also understand that the need for more and better digital skills training will persist over the coming years. Developing new ways to learn and creating enough space and time for employees to do so will be crucial, Garcia-Perez adds, as inaction is not an option.

“A digitally literate workforce that can design and implement digital transformation initiatives will be a key competitive asset,” he says. “Developing talent by giving people access to the digital skills required for existing and emerging roles is essential for innovation, participation and economic growth.”