Here is how employers in the haulage sector can directly address the current skills shortage and reduce the impact on their business in the near future.
You have to first understand the 'why' to plan your 'what'
Why is there a big labour shortage of 100,000 drivers in the haulage industry right now? What led to the government having to bring in the Army to fill logistics and engineering positions?
Why is there a big worry that this will lead to a skills shortage in the very near future?
These are three very essential questions that are being asked in the haulage sector right now, and the answers to them all come down to a variety of factors:
Throughout 2020 and 2021, a large portion of the population was unable to work due to national lockdowns being enforced. The furlough scheme resulted in a big shortage of workers at the time, not to mention that many foreign workers chose to return to their home countries to be with their families. Due to strict immigration and travel rules, many are yet to return to the U.K. which means that a big proportion of the workforce is out of the British job market.
Covid and Brexit have worked in tandem since early 2020 and have directly caused massive issues such as the current skills shortage. This was echoed by Jonathan Portes, a professor of Economics and Public Policy at King's College London, who said “A lot of people left because of Covid, but a lot of them may not come back because of Brexit.” 79,000 EU workers within the logistics sector left the UK in 2020 and recruitment processes have since changed massively. The new point system for recruitment means a much longer process and an inability for employers to carry out work swiftly.
A continuing trend from the younger generation
Although Covid and Brexit are undoubtedly fundamental causes of the current skills shortage, there are other contributing factors too. For example, a trend was already being seen before 2020, where fewer younger people in the UK are opting for professional driving as a career. This has led to the sector having one of the most prominent ageing workforces in the UK (the average age of a haulage driver is currently 57 with 81.1% of transport managers being over 45). Although amplified by Brexit (as it's no longer easy to get EU nationals to fill this gap), the main reason the younger generation are considering other careers is that they include shorter working hours, shorter commutes, and less regulation.
The shift of power from employer to employee
In response to the labour shortage, many employers have opted to increase salaries massively (some by 50%!). What this has led to is a shift in the balance of power. The younger generation already had higher expectations from their employers (e.g. from an ethical and environmental point of view), but now it appears that all candidates are becoming more demanding than ever before. It's a chicken-or-egg type situation now - did employees feel this way before but didn't feel like they could act on it or did the economic shift just present an opportunity or force people to reconsider their priorities?
What are you going to do about the skills shortage?
While it might seem like doom and gloom talking about the causes of the current labour shortage, it's necessary to plan your strategy to get ahead of the curve. This is the only way to reduce the impact on your business. For example, are you going to…
- Bow to current market pressure and increase salaries massively? (but this will give you a long term increase in logistics costs when profit margins are tighter than ever)
- Try to be more efficient in your processes? (which will hopefully avoid disappointing customers but it may stagnate business growth for a while)
- Outsource work to competitors? (which will ease the pressure but you'll have to share your profit margin)
As you can see, whatever strategy you choose has alternate consequences so it's essential to consider which path you want to take in its entirety first.
Essential steps to take now
If you're uncertain about how to address the current skills shortage, a solid strategy to take is to keep hold of the quality drivers that you do have. Here are key steps to take that will improve your situation:
- Focus on retaining staff
Many companies are investing in training their existing employees to tailor them to fill the current skills gaps. Some offer in-house training, where knowledgeable employees share their valuable expertise with others, while others offer outside training. While exterior training does cost more, this is an incentive for talented workers and it trains your employees to the highest industry standard quality.
Don't forget to take advantage of government support too. Depending on the size of your business, the government is currently offering a few different schemes to fund the training of new drivers and the upskilling of existing employees. For example, the Apprenticeship Levy covers most of the cost of training an apprentice for the Large Goods Vehicle (“LGV”) Driver Standard (Category C licence), as well as other roles in the logistics sector. Then there's the Warehouse to Wheels programme which provides a framework to train staff so that they can drive large vehicles.
- Provide high-quality working conditions
The younger generation is attracted to flexible working but since Covid, this now appeals to a lot of workers. To retain workers and attract new talent, you need to provide high-quality working conditions and give your employees the flexibility to grow and develop. What we mean by this is allowing employees to move between roles within the company.
This is a great opportunity for back-office staff to try their hand at warehousing roles or your warehouse operatives may have expressed an interest in trying their hand at HGV driving. Yes, staff will still need training but this will be a lot quicker and effective than hiring new. After all, who knows your business and its processes better than your existing employees?
- Regain control of salaries
Implement a consistent grading system within your organisation so you can benchmark your employees. Communicate this grading to your staff too so that they understand what competencies they need to achieve to be able to earn a certain salary. The more transparent you are with this, the less pushback you will get from employees demanding more.
- Be smart with your recruitment
Don't over-hire! Hiring takes time and can put more cost pressures on your business. Check your current employees first! Many companies already have the people they need, they are just using them in an ineffective way. Explore what transferable skills your existing employees have and support the development of these.
- Outsource if needed
One of the easiest and cost-effective ways to fill a current skills shortage is to hire contingent workers. Why? Because freelancers, consultants, and contractors etc are flexible with their availability, yet they bring valuable expertise and skill to the work being done. This means you can get quality workers within the confines of the timeframe, budget, and project that you have.
- Support outreach programmes
Since the haulage industry has an older workforce, it is vital to attract young people for long-term success. There are many organisations, programmes and educational facilities that are working to raise awareness and provide initial training to potential drivers - so partner with one either locally or nationally. Imagine having a sustainable talent pipeline providing you with fresh drivers year after year?
- Consult a financial expert
While your accountant can help you manage your cash flow and forecast the future health of your business, they can also help you manage your current skill gaps. How? By forecasting your pipeline and helping you to improve the efficiency of your processes (so your team can work smarter, not harder).
If you're choosing to raise your wages to attract workers, they can also help you manage your payroll and increase your bottom line by pricing jobs correctly, saving money where you can, and managing your budget effectively.