As we near the middle of October we are just a few weeks into Q4. For businesses and their people this is a worrying and uncertain time. Heightened economic uncertainty amid rising inflation, growing interest rates and astronomical living costs are just part of the story.
Data from the REC suggests that the early confidence employers had in the economy following Covid fell by 9% from the previous quarter. In addition, there was a 7% drop in those business leaders willing to make hiring and investment decisions.
It’s fair to say that this commercial cooling-off has impacted the recruitment landscape.
In the week 19-25th September, the figures detail that active job adverts hit a low of 1.45 million. This is still high compared to pre-pandemic levels, but experts believe that this is indicative of the skills and candidate shortage the UK is suffering, rather than high unemployment.
Indeed, UK unemployment is at the lowest point it has been for decades. Between May and June this year, the ONS revealed that unemployment decreased by another 0.2% from the previous quarter. Landing at 3.6%, UK unemployment has hit its lowest rate since 1974.
In a stable economic environment, such low unemployment would be considered a good thing. However, anecdotal evidence suggests that this has come from necessity rather than a desire to return to the workforce. Anxieties around the cost of living amid significant financial chaos, are forcing many of the economically inactive back into employment.
So how does the bigger picture affect our recruitment landscape?
Here are the details on September’s recruitment activity from across the country.
The recruitment landscape – September 2022.
Vacancies.
The Total Vacancies Index fell from 62.2 in August to 58.1 in September, indicating a slower demand for workers. Indeed, the rate of growth was the weakest since February 2021.
There were softer rises for both permanent and contract staff, with both hitting their lowest levels for 19 months. However, when comparing the two models, contract staff requirements expanded at a slightly quicker rate.
When comparing the data across the public and private sectors, it was temporary workers in the private sector in most demand. In direct contrast, permanent workers in the public sector were the roles least advertised for.
Vacancies by Sector.
Across September, the growth in demand softened against all but 1 of the categories surveyed. Retail was the only sector that recorded a rise in recorded vacancies.
For the first time since we’ve been monitoring the recruitment data, the demand for permanent IT and computing professionals fell out of the top 5. September saw the demand in our area of interest drop to 8th. There was also a marked decrease in demand if we compare last September’s data with September 2022, with numbers falling by around 75% over the last 12 months.
Demand for temporary IT and Computing professionals fell to 9th position – although the drop was less steep.
Skills in demand.
The information suggests that the IT and computing roles most in demand are conducive with the wider business strategy. Digital transformation projects are being rolled out across all areas of industry, and the demand for skills reflects this. Developers, software engineers, and DevOps professionals are all highly sought after as organisations look to future-proof their businesses against the modern world.
Hybrid and remote working models have made cybersecurity roles a hiring priority. Remote working has many plus points for organisations, but it also significantly increases the risk of network and data breaches. Companies are having to address cyber concerns more forcefully to protect their systems and data from outside threats.
Ignite says.
This is something we have found here at Ignite Digital. We have received many requirements from our clients for Cyber Security professionals across every responsibility level. Though it has been the senior roles most in demand. Our clients within the financial sector are eager to fill these types of vacancies, as are those undergoing large scale internal digital transformation projects.
Placements.
Permanent.
Our recruitment colleagues from across the country reported a continuing rise in perm appointments at the end of Q3. Although still an upturn, it was the gentlest recorded since March last year.
This continuing placement activity demonstrates that there is still a strong demand for staff and hiring is still a huge priority for many businesses.
London showed the steepest increase in permanent appointments while the South of England recorded the first reduction in 19 months.
Contract.
Extending the run we’ve seen since February, the growth in the temporary contracts market is still marked. However, the rate of expansion in September was the slowest we’ve seen in just over a year and a half.
The contract market is suited to the struggles the UK jobs market is facing. Broadly, the demand for staff is still high. Contract workers permit organisations to fill roles quickly and without the long-term financial responsibilities of permanent hires. Contract workers give businesses a scalable hiring model that is flexible and project-based.
The current economic climate in the UK is not encouraging active job seeking. While some workers may be forced to consider a better paid position elsewhere, our conversations with passive candidates indicate a hesitancy to leave a stable ad reliable income.
In contrast, contractors are resilient and somewhat used to the fluctuations in the market. They can hit the ground running and are practiced at finding their feet in a new organisation quickly. All of this makes them a viable and attractive hiring proposition for companies with a hiring agenda.
Staff availability.
As has become a common theme, staff availability continues to be a much-debated discussion point in recruitment circles. Staff availability remains in decline for the 19th consecutive month, however, the rate of contraction across September was the least severe since April 2021.
This was true for both permanent and contract workers, although the former showed the steepest rate of decline.
This was the case across all 4 of the surveyed areas of the UK.
Our colleagues have suggested that the uncertainty of the market, the low unemployment rate and Brexit are the main factors behind such low numbers.
Pay and Salary.
Permanent starting salaries increased for the 19th consecutive month in September. The rate of growth remained rapid despite edging down to the lowest point since last June. Approximately 44% of recruiters surveyed noted higher salaries, while only 2% saw a decline.
Temporary staff also saw improvements to their salary. Hourly wage rates have improved each month for the last 19 months.
Again, the ONS statistics confirm the scale of growth. Employee earnings across both the private and public sectors rose 5.5% year on year from the 3 months to July.
Q4.
As we enter Q4, the statistics show that recruitment activity is still pivotal to the UK economy.
The mini-budget laid out by the new Chancellor highlighted some significant changes for businesses. Most notably for the contracts market, the repeal of IR35 has the potential to ease the admin and headache for businesses looking to secure the services of those with personal service companies.
April 2023 has been the estimated timescale for when we can expect the changes to come to fruition and it’ll be interesting to be looking at the data this time next year and see if the contracts market is stronger as a result.
However, IR35 reforms are just one area of change and there is more work to do. It’s clear that labour shortages and economic inactivity are still very much hiring barriers key issues for businesses.