What is the new normal for labour markets?

What is the new normal for labour markets?

In the employability world we like to be temperate in our language, but Covid-19 makes a mockery of this.  The impact on employment will be huge and long-lasting and many lives will be blighted and scarred – some of them forever. So the impact of Covid-19 will dominate the work we do for the foreseeable future. The DWP has done a remarkable job in managing the demand for UC registration, but as we emerge from the emergency planning phase, what lies in store?

What it is possible and appropriate to do locally will depend on the national response, and there are big national differences here.  In Scotland Fair Start Scotland is a major source of support in every area and the Scottish Government is using it to explore how to create more locally appropriate and collaborative approaches, drawing on the skills, expertise and capacity of a range of local partners – in effect it has become a local programme.  In England the Work and Health Programme has become peripheral – important to its clients but marginal in terms of money, and lacking any ability to influence more collaborative local approaches – so local partners have needed to step into this breach.  

If there is to be a scaled up national approach it is vital that it is sensitive to local differences and finds a way to build on and support local assets and collaborative approaches.  If this isn’t done there is a real risk that carefully nurtured local approaches, resources and capacity could be damaged. This will help neither clients nor the Government.

Ironically, we entered this extraordinary period with perhaps the healthiest ratio between local service capacity and need that we have had for a long time – resources have been shrinking but at a slower pace than unemployment.  Now it is all change, and it will be important for local partnerships to find ways to make the best use of the capacity of the whole structure of local employability support in an organised way.

It is possible to envisage a number of stages as the situation unfolds:

  • In the short term there will be a need to provide a transformed scale of support locally with a focus on resilience, mental health, and tackling money management and debt issues. Responding to a massive increase in demand will require services which can respond to the very different profile of this demand – in other words there will be a need for substantial and rapid triage and referral to the full range of existing support in an agreed and organised way.
  • There are jobs available in the short term – through turnover and the specific demands in logistics/delivery, health and social care and large scale retail and many will find these appealing as at least a stop gap (with health and social care in particular offering a range of longer term careers).
  • We need to identify those more vulnerable to long term unemployment, with a particular focus on young people emerging from school and college. The DWP’s own research has identified a range of indicators which help to pinpoint those at greater risk of long-term unemployment – while this it is not perfect, it is good enough for times like these.
  • In putting in place a short term response it will be important not to dilute the value of services which are currently targeted on those further from work, those with disabilities and health conditions. These will remain priority clients and they are likely to find it even harder to find or stay in work. We don’t want to overwhelm these services with those who are newly redundant.
  • We are facing a much looser labour market for a long period, so it will be important to help people maintain work-like routines and engagement, and use the time to enhance their skillsor to retrain into areas that are likely to emerge strongly from the recession.
  • Employers will be able to take the pick of the bunch, and if the last recession provides a model many skilled and experienced people will take jobs well below the level they would normally work at, so squeezing out more appropriate recruits – and exacerbating the availability of jobs for less qualified people. Local approaches can help 


employers to take on a more balanced workforce which will include those who will find it harder to find work and are at risk of very long-term unemployment. This will bring significant benefits in terms of loyalty and sustainable workforces.

  • In the medium term, in each area we will need to reconfigure the whole infrastructure of support, so that it can respond to the different needs of specific client groups and make effective connections with different employment sectors as they recover at different speeds.
  • The depth of the recession and the scale of business failure may create opportunities for significant business start-up – perhaps associated with rapid growth. Our work with the FSB has revealed the extent to which small businesses tend to under-recruit, so there is real scope to ensure that they don’t and that they feel comfortable to grow through recruitment, mainly by putting skilled HR specialists alongside the business development process.

Out of this assessment emerge five touchstones for success:

  • The futures of those who are unemployed are intertwined with the futures of employers as they emerge from the recession. There is a need to align business growth support and employability support to ensure that growing businesses are not under-recruiting, and that people have the right skills at the right time
  • It is important to take a whole system approach in each area – what is our joint capacity, who has the specialist skills for particular groups and needs, how can we collaborate on a system wide triage and referral approach to reduce the load on JCP and make the best use of the capacity we have?
  • Related to this, national investment needs to support strongly collaborative local approaches – aligned to local issues and employment profiles. The way that national investment is played out can ensure that it builds on this and creates a local infrastructure that will stand us in good stead for many years – or severely damage it by overwhelming it with a large national programme.
  • There is a need to ensure that services are carefully disaggregated in terms of their provision of specialist help – for young people, for people with disabilities, for those most at risk of long term unemployment, and for those with health conditions – and it will be important to ensure that eligibility for these is not relaxed.
  • These approaches will need to be underpinned by much more accurate and sensitive local labour market intelligence. This needs to draw on the army of those engaged with employers to understand current and emerging needs, and the wide range of insights emerging about the most affected sectors and business types and how they may emerge during the recovery phase, and ensure that this information is transformed into useful intelligence for local training providers and employability organisations.

There is no reason why we can’t do this. There is a huge reservoir of knowledge, insight and skills around employability across the UK. A carefully phased, disaggregated approach, built on high quality intelligence and integrated business development and employability approaches – locally designed and implemented – will help to accelerate the route out of recession. The impact of Covid-19 may not lend itself to temperate language, but we can put in place a carefully planned and balanced response that can create a world class infrastructure for the future. 

Richard is a Founder and Director at Rocket Science based in our Edinburgh office.  You can check out his profile here.

School Ties

School Ties

Small businesses can play a really important role in helping young people transition from education into work. Richard Scothorne reflects on his work for the Federation of Small Business in Scotland, School Ties.

Small businesses are vital partners for schools in helping young people make a successful transition to work.  This is the key conclusion of our new report for the FSB in Scotland, ‘School Ties’, which presents our research into the scale and significance of small business engagement with schools and how to transform its reach and impact.  Although our work was built on interviews across Scotland the conclusions reflect other research across the UK.  Our main findings are:

  • Business engagement with schools – done well – can transform young people’s futures and earnings.  For example, every meaningful engagement with an employer can increase a young person’s subsequent earnings by 4.5% and those who have encountered 4 or more employers while at school are up to 20% less likely to become NEETs
  • It is really important to help small businesses (employing fewer than 50 people) engage with schools.  Most businesses are small businesses (84%-87% in urban Scotland and 93-96% in rural Scotland)) and provide a high proportion of jobs (24% – 36% in urban areas in Scotland – and 60-72% in rural Scotland).  Without engagement with small businesses pupils will be missing out on understanding a key part of the local economy and a significant source of great opportunities.
  • Most small businesses are not involved with schools – mainly because both schools and small businesses find engagement difficult.  It can take schools as much time and effort to set up a relationship with a small employer who may have an occasional opportunity as with a large employer who may have a number of regular opportunities.  It requires sustained effort and energy, with a key role for Head Teachers in creating a profile for their school in local small business networks and organisations.
  • But small businesses are willing partners – engagement needs to be made easy, and many just need to be asked.  Those that are involved cite altruistic reasons for their involvement – small businesses see themselves as part of the local community with a role to play in supporting a range of community issues of which young people’s employability is one.  However, most say that they gain business benefit from engagement – many citing reputational benefits as well as the value of the contribution made by pupils.


  • Schools in the most deprived areas have hinterlands with relatively low levels of small business activity.  They therefore need to spread their net wider to get the range of opportunities they need – and this suggests a collaborative approach with neighbouring schools.
  • In rural areas – where most business are small businesses – it is particularly important for schools to develop a wide range of small business relationships rather than focus on a-typical larger businesses.
  • Small businesses which are involved with schools contribute in a wide range of ways.  It is important that businesses are helped to understand this range of opportunities and match their ability to contribute to the needs of schools and pupils.
  • Teachers can benefit from engagement with pupils as much as pupils – bringing back new insights into how they can use to make their lessons more relevant to the world of work and enhancing their ability to provide useful insights into current and emerging opportunities in local businesses.
  • …and parents – as business owners, employers, and employees – can provide an important way of making connections between schools and businesses.

On the basis of these findings we have developed a number of recommendations about how to transform the scale and reach of school engagement with small businesses and so enhance the opportunities for pupils to match their aptitudes, aspirations and interests with the world of work.  This report is complemented by a recent assignment to review the work experience approach of a large local authority and make recommendations about how this can be placed in a much wider approach to employer engagement.

Download the full report here

…and our previous report on realising the employment potential of micro-businesses here

By Richard Scothorne


Richard is a Founder and Director at Rocket Science based in our Edinburgh office.  You can check out his profile here.