What began a few years back with dire warnings about a growing skills gap in Britain has evolved into a full-out war for talent that is affecting organisations at every level. The battle lines are well and truly drawn as demand for talented staff drives up salaries and prompts top companies to poach employees from rivals. Businesses try to retain star workers and executives with extravagant share options, offer joining bonuses to prime recruits and even pay off education debts for promising university graduates.
Now the Government has rightly risked stirring an already volatile pool of public opinion about immigration by calling for a relaxation of the regulations on work permits so that foreign workers, particularly those with information technology training, can help meet the shortage of skilled workers. It is a beginning.
Some time before this development, we had asked Matthew Lynn to look at the growing war for talent and what it meant to employers and employees alike. He found that pay for bosses had risen 16.5% in a year in the UK and even more in Germany, and that one in five of Britain's top recruiters of graduates were paying 'golden hellos' of pounds 10,000 and more. He goes on to offer a five-point strategy to employers and workers to help them survive and even exploit the talent war.
The short-term tactics now being used by business will pose problems in the longer term. Fighting the gap with higher salaries and bonuses will add to wage pressures and threaten inflation and the business climate.
It also seems to be causing employers to expect staff to work longer and harder - which will not help a work/life situation in the UK that is already well out of balance. An influx of foreign-born workers may help to reduce the pressure on interest rates in one of the tightest labour markets in memory. More importantly, it will increase the depth and variety of ideas in the UK economy. But the skills gap cannot be closed from outside the country. Ironically, skilled immigrants will ultimately help to create more jobs here, but it should not obscure the growing need for skills development in our native population, where recruiters now say that one in five in our workpool fail to meet basic numeracy standards.
Some strong pointers for a longer view come in Matthew Lynn's strategy for employers. He advises them to be as flexible with their staff as they are with customers. And to let them and their abilities shine in a way that satisfies their aspirations. Most important, however, he tells bosses to dig deep into their own organisations rather than leaping into the bidding war outside, and perhaps find that someone in their own post-room could, with encouragement and training, do the job that needs to be done.