Post-pandemic labor shortages are just one significant problem facing the economy
Reading the news today is not for the faint of heart. Just as the pandemic appears to be under control, a whole new bunch of challenges have emerged, which the media gladly amplify 24/7/365 to drive views and clicks in a doom-driven competition for attention.
This is a deeply unsettling time. Life is getting significantly more expensive and it feels like things are not working as they should. In the UK, the single biggest issue today is the cost of living crisis, driven by a perfect storm of domestic and international tailwinds. Whatever happens, it is going to be a tough few years ahead.
Yet, despite this negativity, it is possible to find renewed hope by spending time with startup founders. Many of their companies are developing new technology to tackle some of the biggest global problems we are facing. In doing so, each one has the potential to make the world just a little bit better. Exactly what we need in 2022.
Here are three of the most common headlines and how startups are making an impact.
Labor shortages. Labor shortages in the UK are at record levels. Data from the ONS shows that there are currently 1.3m vacancies and it is apparent walking around London that many businesses are struggling to recruit staff to stay open or finding it hard to offer a reasonable quality of service when they do. This is creating opportunities for startup founders building technology companies in many sectors.
In roles that require manual or repetitive work, such as waste management or agriculture, computer vision and robotics are combining to do the sorting and picking work that sufficient numbers of humans no longer want to do. In turn, new jobs are being created to manage, monitor and service these new machines. Whilst the debate around the impact of technology on jobs may continue, in recent years it seems that technology is both unlikely to displace jobs and is essential for businesses to function.
In other sectors, startups are less focused on replacing humans with robotics, but on giving employees the data and tools to operate as efficiently as possible. The typical approach involves automating decisions and tasks that can be made using data and providing intuitive and efficient tools to conduct the remaining manual processes. These software solutions are increasingly verticalized – known as vSaaS – and cover many sectors including hospitality, insurance, finance, and transportation.
Supply chain problems. Global supply chains were stress tested throughout the pandemic and major weaknesses were revealed. Today, some goods are flowing more freely around the world, whilst others have been caught up in events such as the war in Ukraine. Startups in this space are tackling the problem from several different angles.
First, deploying artificial intelligence, machine learning, and other approaches to optimize manufacturing. This reduces waste, increases output, and protects – or even enhances – margins so that factories can produce more goods and control prices. Some startups are using technology to reformulate the underlying chemical processes to make them more efficient, cost-effective, and less damaging to the environment.
Second, they tackle the problem of getting finished goods from the factory to the consumer. With a long-term goal of transiting goods around the world autonomously, short-term approaches include developing safer methods of transport and collision avoidance systems when traveling by ocean, road, rail, or air. New propulsion systems such as electric or hydrogen will have economic and environmental benefits.
Third, they tackle inefficiencies in stock management and allocation using cloud-native tools to ensure a fully connected and joined-up approach. This piece of the puzzle solves the problem of lost or underutilized goods being stuck in the wrong place.
Energy prices. Energy prices continue to rise at an alarming rate. The energy price cap for consumers set by OFGEM in the UK will rise by 80% on 1 October. Businesses are not part of the cap and have to source gas and electricity on the open market.
Founders in this space are taking a couple of different approaches. There are those looking to improve the efficiency of alternative sources of energy generation – such as solar or wind – whilst simultaneously driving down the price. Whilst others look to find efficiencies by optimizing existing processes and replacing old, energy-intensive techniques with modern alternatives. Most of these developments are focused on heavy industry and include the production of everyday materials such as cement.
None of these challenges can be solved by the private sector alone. Government must provide emergency support in the short-term to individuals and businesses that need it most whilst pursuing long-term policies that enable entrepreneurs to flourish.
In the UK we are fortunate to have one of the most vibrant startup ecosystems in the world. We must continue to nurture and support it. Startups help us solve problems faster, with less strain on the public purse, and create hundreds of thousands of jobs. That, amongst all the doom and gloom, is one, small reason to be optimistic.
