The recruitment data from across July reads much the same as in recent months.
It is still a great time to be a job seeker.
Vacancies are nearing record highs, and starting salaries echo this trend. However, for business owners looking to fill their vacancies the landscape isn’t quite as appealing.
Finding candidates, either permanent or contract is proving to be difficult in a tight candidate-driven market. Economic uncertainty, rising inflation, and ever-increasing costs of living are very real concerns for business owners. Employers are trying to balance business needs with employees’ financial concerns. Many are finding this responsibility a challenge.
This is an issue that shows no real signs of slowing. The Bank of England warns the UK may fall into a recession as it raises interest rates by the most in 27 years. It has been forecast that the economy will shrink in the last three months of this year and keep shrinking until the end of 2023.
So, what does this economic picture mean for the recruitment industry? And what trends are continuing to play out this year?
Here is our monthly report on the data offered by our recruitment colleagues across the country over July.
Vacancies.
Overall, the demand for permanent and contract staff is still steep. The demand for permanent staff increased at a sharper pace than that for contract workers. Although still higher than the average, the demand for both types of vacancies expanded at the softest rate for 16 months. It was the slowest rate of expansion since March last year.
Private vs. Public Sector.
Across both the public and private sectors, there was an increased demand for staff. The strongest requirement was reported for permanent staff in the private sector while the softest was for permanent employees in the public sector.
Both the public and private sectors showed slower increases in demand for staff compared to previous months.
Official figures.
The data from the ONS appears to support these levels of growth…. strong but softer. The number of vacancies remained solid over Q2.
It was reported that the UK recorded total vacancies of 1,294,000. This was down slightly from the record of 1,297,000 which was the figure reported in the 3 months to May of this year.
Even though this number was +49.6% more than the number reported in the same period last year, it still marks the softest year-on-year growth since the 3 months to April 2021.
Vacancies by Sector.
The number of permanent vacancies across each of the 10 monitored categories increased in July.
Unusually, IT and Computing dropped from 1st spot in June to 7th in July. This is the lowest ranking requirement position that we have witnessed since we started our reports.
Indeed, this time last year, vacancies in IT and Computing were the highest across all the monitored groups.
Perhaps unsurprisingly for the time of year, vacancies across Hotels and Catering and hospitality came up top. It will be interesting to see if this falls significantly as we come to the close of the holiday season.
With regard to the IT and Computing vacancies for contract or temporary staff, the data tells a similar story. Under this requirement, the vacancies fall further. Temporary IT and Computing vacancies come in at 8th spot. Once again, the demand year on year has fallen. The numbers of vacancies are down approximately 50%.
Demand for skills.
Amongst the IT sector, the demand for skills can be explained by looking at the wider business environment. Digital transformations and data are corporate currency, and the skills requirements reflect this.
In IT and Computing, the need for skills look like this.
- Analysts
- Business Intelligence
- Data Professionals
- Cloud Engineers
- Developers
- Software engineers
- C#
We absolutely agree!! Head over to our job board and you’ll see several vacancies – permanent and contract, across each of these skill sets.
Placements.
The placement data somewhat mirrors that of the vacancy data.
Permanent placements.
Across permanent placements, there have been further slowdowns. Although the numbers are still way above average, the rate of the increase continues to soften. The increase across July was the softest recorded in the current 17 month run of growth.
It was reported that the growth continues to be held back thanks to low candidate numbers, the softer rise in vacancies, and slow decision-making about new hires at client level.
Decision makers are hesitant thanks to the significant economic pressures and continued instability.
Contract Placements.
There was another increase in billings across July. This is an ongoing trend, which has seen a rise in billings every month for the past 2 years. Again though, the rise in July was the softest rate of expansion since February 2021.
Candidate availability.
For the past 17 months, we have seen a fall in total staff availability, and this remains the case. Despite this though, July saw the weakest rate of deterioration since April 2021.
The drop was in evidence across both permanent and contract sectors.
Permanent candidate availability.
As has been the case for the past year and a half, the availability of candidate numbers weakened again in July. However, the rate of decline was the least significant since April 2021.
Recruiters reported anecdotal evidence that echoes that of previous months. As well as the general shortage of skills, the continued economic uncertainty is making employees hesitant to leave secure roles.
Perhaps though, this may change. Could rising costs of living be the motivator over the coming year? With starting salaries at record highs, could employees be forced to look for higher-paid roles elsewhere?
Contract / Temporary candidate availability.
Across the contract and temporary markets, the data also shows a downturn in candidate availability. Recruiters have put this down to a combination of events such as Brexit, general ongoing labour shortages, and an increase in the preference for permanent work.
There is no doubt that in the current climate the security of permanent employment seems attractive.
However, we’d add that the very nature of contracting is fluid. Contractors have autonomy over their working lives. The nature of the work allows them agency and flexibility over their working patterns. This makes the world of contracts work hard to predict or speculate on.
At Ignite, the summer months are often our quietest time for placing contractors. These professionals schedule their assignments around other commitments, childcare needs, holidays, and family commitments for example. This means that there are fewer candidates on the market than at other times of the year.
Pay and Salary.
Permanent salaries.
The ongoing starting salary increases continue during July. This upwards trajectory means that the current period of inflation has stretched to 17 months.
Nearly half (47%) of recruiters reported higher salaries, citing low candidate numbers, competition for staff, and the rising costs of living as catalysts.
This continued rise was led by London but was echoed across all 4 monitored UK regions.
Contract rates.
The rise in daily and hourly rates of contract and temporary staff has also continued in July. Since March 2021 these have risen steeply. However, it is worth noting that July’s rate of inflation was the softest reported for around 12 months.
The Office of National Statistics says…
Data from the ONS reveal that employee earnings (including bonuses) have continued to rise in the 12 months to May. This is true despite the rate of growth easing from 6.8% to 6.2% year on year.
This leap has caused headlines of epic proportions, not least that this level of growth is the steepest we have witnessed in over 20 years.
July in a nutshell.
With vacancies and salaries at a record high, it is STILL a great time to be a job seeker.
As we have said before, the fact that organisations are continuing to find talent such a struggle will have wider economic consequences, constraining the growth of the economy in the long term.
As it stands, we have seen a 10% surge in demand across the economy. With the labour market as restricted as it is, we are looking at significant problems.
As unbalanced as it is, this worrying equation could mean a 1.2% fall in GDP and productivity over the next 5 years. In monetary terms, this could cost the economy anywhere between £30-£39 billion/year. To put this shortfall in some sort of perspective, this figure is just short of the entire UK defence budget.
These numbers require a robust solution and one that we have speculated on in previous The Recruitment Landscape commentaries. Government must work alongside organisations to create a workforce planning strategy that is future-proof.
Systems must work together to create and put in place usable and practical policies and procedures covering skill acquisition, regional investments, and market activation.
The government needs to create a practical visa and immigration system to invite and welcome talent back into this country. The current system is confusing for employers and undergoes multiple changes. It also carries a financial cost to employers. This coupled with considerable red tape deters companies from using it and significantly restricts access to much-needed talent from outside the UK.
Business must work with recruiters and push workforce planning to the top of the agenda. Together, we must work to nurture stakeholder relationships and form skills alliances.
As an industry, we must ensure our clients prioritise under-resourced demographics through robust DEI practices and ensure that work and working practices reflect the societies and requirements of the country in 2022.
Do you agree? What do you think we need to do to address the threat to the UK economy? We’d love to hear your thoughts.
As ever, please leave your comments below.