The early months of 2022 haven’t been kind to the UK economy. The cost of living continues to rise, which will have implications for businesses as well as houses over the UK. On top of this, the ongoing war in Ukraine will of course have significant consequences for the world, in terms of personal tragedy, political instability, and the wider global economy.
Despite these catastrophic events, UK recruitment data from the REC reports that we can see early signs of recovery in business confidence levels as we move toward spring. Industry experts have attributed these optimistic shifts to the fact that Omicron has become less of a threat. There is also a clear indication that we are moving away from stringent government pandemic controls. A sense of stability is returning, and with it, employer confidence.
The headlines look promising.
The data reveals that hiring and investment have risen +17% in the 3 months to January. It’s good news looking forward as this trend looks set to continue. Businesses have reported their intention to hire permanent staff in the short to medium term, while there is also the will to hire temporary workers in the near future.
These numbers are a clear indication that businesses are seeking expansion and that they have confidence in the continuing improvement of the UK economy as we enjoy the softening of pandemic lockdown measures.
What they intend to do is one thing…will the recruitment landscape permit them to do it?
Here is our breakdown of February’s recruitment data, seasoned with a few of our thoughts along the way.
The recruitment landscape – February 2022.
The headlines are a double-edged sword for the recruitment industry. On the one hand, the hiring market is buoyant. Employers have their sights set on growth and recovery. There is a wide positivity in the market outlook, resulting in rising workloads requiring robust hiring activity.
Here at Ignite HQ, we are enjoying a host of new roles to get our teeth into, but the struggles remain the same. Candidate availability is an ongoing hurdle we must overcome. The official feedback from our peers across the country reveals that both permanent and temporary candidate availability fell at the sharpest rate for many months.
Hand in hand with this, vacancies were also reported to have expanded at the quickest rate for 3 months. Trying to fill more vacancies with fewer candidates is a challenge…but one our skills and network equips us to tackle with confidence.
Here are the numbers beyond the headlines.
Vacancies and hiring.
Recruiters reported that the total number of vacancies increased at the quickest pace since November last year. Since that time, you may remember that vacancy numbers were still high, but slowing. However, February reported a marked change. February marked the first time that growth of overall demand for staff had increased for 7 months.
The rise in vacancies across February has been driven by both permanent and temporary roles in both the private and public sectors. The strongest rate of growth was to be seen for permanent staff within the private sector, while the softest was for permanent staff in the public sector.
IT and computing top vacancy demand.
Considering our workload, it came as no surprise to us at Ignite that the vacancy increase has been led by the IT and computing sector.
Our peers report that they have seen a demand for the following skills within our specialism.
- Analysts
- Automation Testers
- Developers
- Infrastructure analysts
- Software engineers
Our thoughts.
Developers are always on our radar. Our clients are progressive businesses, always looking to improve and expand their digital offerings. Digital transformation is an ever-changing concept. Demand for new tools and technologies is increasing at an astounding rate. Developers are always in demand as businesses strive to deliver these projects.
For some time, we have added testers to the list of in-demand skills. This month, it seems as though our colleagues agree, as Automation testers also feature on the skills in short supply.
Interestingly, it was reported nationally that data professionals are in excess supply. Over recent months, we have found the opposite. Our clients have been seeking data talent as they seek to leverage the advantage that data holds for business growth.
ONS data.
Data from the ONS confirms this increase in open vacancies. There has been an overall rise in UK job vacancies in the 3 months to Jan 2022.
Official figures show that year on year, vacancies have more than doubled (+112%). This equates to 1,298,000 open jobs. This is an increase of 45k vacancies than the preceding 3 months and is the highest number of vacancies since 2001.
These numbers are truly indicative of recovery when it’s considered that this is more than 60% higher than pre pandemic levels over the same period; Dec – Feb 2020.
Hiring.
Permanent placements.
Mirroring the activity of the last 12 months, permanent placements increased during February.
Although still intense, the rate of expansion softened the third month in a row and was the slowest since March last year.
The data suggests this to be true across most of the UK. It was only our colleagues in the North of England who reported month on month growth. This area also reported the sharpest increase overall.
Temporary / contract billings.
The contract market continues to improve. There was a reported increase in temporary billings for the 19th consecutive month. However, the rate of growth softened for the first time since October.
London reported the steepest increase in temporary billings, although all 4 regions of the UK recorded slower expansions than at the start of the year.
At Ignite, we too have enjoyed some new contract business throughout February and the start of March, as well as contract extensions for our placed runners.
Through our conversations with clients, we are seeing some recurring (although a little contradictory) themes as to why this may be. It’s suggested that contract numbers may have increased in February due to
- A lack of permanent candidates
- Improved confidence in economy and market activity
- Some preference for contract staff amid the tail end of the pandemic and uncertainty over
- further rises in inflation.
Staff availability.
Once more, staff availability is limiting both the placement and billing rate. Candidate numbers remain depressing reading, with supply falling for the 12th consecutive month. Not only this, but the rate of decline was also the sharpest since the start of the year.
The trajectory is not quite as rapid as we saw in mid 2021, but the pace is still significant and the quickest for 3 months.
This is true across both permanent and temporary markets.
Perhaps most alarming though is the Permanent candidate data. Supply in February declined at the steepest rate since November, and at the sharpest rate since 1997.
Both sectors put this down to
- General lack of candidates amid strong demand
- Fewer EU staff
- General lack of skilled labour
- Hesitancy to move amid the pandemic
Salary and pay pressures.
As in previous months, February saw a near-record increase in starting salaries. The rate of the lift rose to the second sharpest on record, only beaten by the high in November last year.
It is a widely acknowledged belief that permanent salaries have risen as demand for staff exceeds supply and as a tactic to attract jobseekers in the battle to win talent.
In sum.
February was a month much like those which came before it. On the one hand, businesses are looking to thrive. Hiring and investment have increased by almost 20%, with vacancy rates mirroring these numbers. However, employers are struggling to fill these roles amid a candidate scarcity and a widespread skills shortage. We can be optimistic about the growth of the economy as we move into March but there are unknowns on the horizon. Rising costs, inflation rates and political uncertainty loom, as does April’s National Insurance rise.
These factors come together to create the perfect storm for businesses. We shall wait to see how they affect recruitment trends going into the spring.