17 March 2023

Helping business to recruit marginalised people can turbo-boost the Budget

By Harry Brown

The UK has a peculiar labour market. We are in a time where there are high levels of employment, low levels of unemployment and yet businesses are reporting that they have over 1.1 million vacancies. At its peak last year there were fewer people available to work than vacancies in the UK.

Why should this matter? On the one hand the large number of unfilled roles is hampering the prospects for many UK businesses, which in turn can limit the potential for the much needed growth in the economy. On the other hand, there are millions of people that have barriers to employment that want to work and who, for some, accessing a good job could create a much needed pathway out of poverty.

There is a clear potential for a win-win situation that the Government has at least partially recognised in this week’s Budget.

The announcements made on Wednesday are targeted towards unlocking some parts of the potential labour market that have significant disincentives to returning to work. 

For parents, the cost of childcare is a real blocker. The UK has one of the most expensive child care systems in the world. A household can be far better off with a single earner and the other parent providing their own care than having two earners in the household. Going back to work just hasn’t added up. 

For people with disabilities or long term health issues, the Work Capability Assessment meant that potential risk of losing the benefits if employment didn’t work out. This put people off applying for jobs they could be capable of. 

The interventions announced in the Budget are a big step forward in changing this. It was also notable that Labour did not critique these employment-related announcements.

One side of the coin

However, the announcements only addressed one side of the coin, i.e. persuading people with barriers to work – those with disabilities, parents with caring responsibilities or those on universal credit – to seek work. 

They did little to encourage businesses themselves to actually think about employing people with barriers to work, and nothing to help them take them on. This is vital when there are other ways that businesses can respond to a labour shortage, for example by recruiting from abroad or by developing automation and AI systems.

The encouraging news is business is keen to engage. Before the Budget some people were calling for an update to the skilled worker categories to open up immigration to fill roles. However, from our own research, to be realised next month, 71% of business leaders we surveyed would prefer to hire from diverse groups in the UK than look abroad for workers. 87% felt the UK should be training more of its workers to fill skills shortages and 79% saw that diversity in the workplace is beneficial to the organisation.

Next month my organisation, Regenerate Trust, are launching our first report as part of The Good Jobs Project. It shows that businesses need to be incentivised and supported to really take advantage of this opportunity. While you’ll need to wait for the full report to see the detail, some highlights include:

  1. Businesses need to be made aware of the benefits of hiring marginalised people. Sometimes people carry prejudices about certain societal groups and these need to be broken down. But businesses can be made to see the value that tapping into these groups can bring. For example, one organisation we interviewed said that recruiting young people leaving the care system had a large positive impact on their Employee Value Proposition, which gave other employees a purpose to come into work. More businesses need to be shown these benefits.
  2. They need to be convinced it can work for their business. If a business is going to take action it needs to be convinced that it will add value to their business. This could be financial or strategic. For example, there have been studies showing that there are better retention rates for employees from some marginalised groups, that diversity of the workforce can bring innovation and that it can help to foster a positive business culture.
  3. And sometimes they just need support. Recruiting from certain groups might not be easy and adaptations may be needed. Knowing where to start can be hard. Help, while hard to find, is available. For example, the Employers’ Forum For Reducing Re-offending (EFFRR), chaired by the CEO of Greggs, convenes people from business to demonstrate the advantages and practicalities of recruiting people with criminal records. They bring together organisations that might compete fiercely on the high street, but who will collaborate to help solve a social problem.

We applaud some of the interventions announced this week aimed at addressing people with barriers to work – now we need to work to make sure businesses are ready to take them on.

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Harry Brown is Director of Re-Generate Trust.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.