The past two months have witnessed extraordinary turmoil in UK political and economic life and across the macroeconomic landscape globally. These have impacted and are likely to continue to profoundly impact the recruitment sector in the UK and the wider labour market.
December is traditionally pantomime season in the UK ahead of Christmas festivities, but Westminster has been serving up political pantomime for some months; three Prime Ministers in as many months, a “fiscal event” that saw sterling eviscerated in global markets, and U-turns (IR35 and various spending and tax cuts/plans!) that left commentators heads spinning.
Economic Winter Opens Up
Jeremy Hunt, our most recent Chancellor, delivered the Autumn Statement on 17 November, and within it, painted a grim picture of the UK’s finances and economic position. He stated that the UK economy was already in recession and that GDP would contract by 1.4% in 2023 before expanding by 1.3% in 2024. He announced sweeping tax increases and budget-balancing initiatives likely to hit public services hard. Inflation remains at decades-high levels – with disposable incomes set to fall by 7.1% in real terms – and with growing industrial unrest (including nurses voting to strike), the UK is bracing itself for a challenging winter and beyond.
Global economic headwinds will continue to add pressure. The International Energy Agency released World Energy Outlook 2022 and issued a dire warning that the world is facing its first-ever global energy crisis. On a broader canvas, UN Secretary-General, Antonio Guterres, warned that the world faced a “global catastrophe” as, under today’s policies, the world would see a rise in average temperatures of 2.8 degrees centigrade by the end of the century.
Shortages, Skills, and Solutions
Notwithstanding data showing a slowdown in the UK labour market activity, there remain widespread shortages and opportunities for recruiters.
The KPMG and REC UK Report on Jobs survey (released on 10 November) revealed that permanent placements declined for the first time since February 2021, and temp billing was stagnant whilst starting salary inflation slipped to an 18-month low. All driven by increased economic uncertainty.
However, significant vacancies remained throughout the sector even if the growth in vacancy rates for both permanent and temporary staff slowed.
Elsewhere, the Office of National Statistics (ONS) reported in November that the number of temporary workers in the UK fell by 0.4% in July-September 2022 compared to the same quarter in 2021. It also estimated that the UK unemployment rate was 3.6%, 0.2% lower than the previous quarter and 0.4% below pre-pandemic levels.
The lack of skilled workers was a key theme in the UK recruitment sector response to Mr Hunt’s Autumn statement.
“The number of vacancies remains well above pre-Covid figures, meaning that skills shortages are still prevalent, particularly in the highly skilled labour market.”
- Tania Bowers, Global Public Policy Director at APSCo stated.
In addition to the trade bodies, celebrated sector leader Ged Mason, CEO of Morson Group, added that “The UK’s resilience is only possible if we have the skill sets to tap into when required, and with several pinch points predicted as major projects overlap, we face a bourgeoning skills crisis.”
No Place For Ageism
Many are now turning to the older workforce as a cohort that could help to face these shortages in terms of the number of workers and the skill sets needed across the labour market.
Research from LinkedIn (published in November 2022) showed that 72% of UK business leaders focussed on hiring experienced workers, who retired because of the pandemic. Whilst there is potential to grow the labour force here, there remain challenges as the same research revealed 38% of those aged 50+ felt they would be disadvantaged in the labour market due to their age.
The over-50 cohort of the working population could be set to increase anyway, as CV-Library, in its exclusive survey of over-50s, has suggested that as much as 91% of the inactive workers in this age bracket intend to return to work. The ONS has already shown that the number of people aged 50-64, who are economically inactive, has grown by 3.6 million, a rise of 10% since before the pandemic.
Recruiters have a potentially valuable source of candidates here. It will be interesting to see how they and employers respond to this opportunity to address, at least in part, the large-scale vacancies.
Well-being and Burnout
Workforce well-being and mental health remain key issues within the labour market, and key factors for recruiters and employers to have the front of mind (and centre of heart!) over the coming winter months.
Perhaps most ubiquitous is the stress and worry workers are feeling regarding the cost-of-living crisis, with inflation in double digits amidst a global energy crisis. According to research from HR Software firm, Personio, 69% of employees in the UK and Ireland are worried or stressed about making ends meet in the coming months.
A further 22% of employees stated they were worried about losing their job, and although the research revealed that 40% of businesses had introduced plans to support workers facing the cost-of-living challenges, almost a quarter (24%) are not planning to offer any support.
Research from Randstad (surveying 7,000 people across 5 markets) has shed lighter on this key issue. It shows that whilst 25% of employees have received employer assistance (outside of annual wage rises), workers want more support. The greatest demand comes from younger workers, with 57% of Gen Z and Millennials placing the responsibility to help them meet the cost-of-living challenges with the Government and employers.
“As talent shortages continue across many industries around the globe, employees are now facing a fresh challenge of the increasing cost of living. Against this backdrop, workers are looking to employers to offer the complete package – flexible, inclusive, and financially stable employment.”
- Sander can’t Noordende, CEO at Randstad (sees this as a call to action)
Learning and Development professionals have also signalled the critical importance of mental health and well-being. Research from DeltaNet International indicates that such professionals view these issues as the most important eLearning topics for the next 12 months. This is followed by stress management for employees, with 88% of employers concerned about the effect of the cost-of-living crisis on employees.
The balance between work/life is now a key component in how workers choose roles; half of the workers prioritise this while job hunting, according to data from Glassdoor released in October 2022. Research from the Glassdoor Economic Research team also found increases in the mentions of burnout, overwork, and mental health in employee reviews between 2019 and 2022 – there was a staggering 86% increase in mentions of burnout, for example.
New Ways of Working: Challenge and Hope
All the above must be viewed in the context of a transformation, like how people choose to work. This is still iterating, but getting the right response will be vital for employers and the recruiters that support them.
Flexible working arrangements (from hybrid to remote) have become seemingly established, with evidence showing that employers that fail to offer flexibility will lose talent to rivals. Yet research shows Gen Z workers prefer in-person context to work, with 81% feeling disconnected from peers when working from home.
At the same time, the general demand for remote jobs reached an all-time high, according to a study released in October 2022 by ResumeOK. The demand for remote work in the UK was 889% higher that month than in 2019.
Yet research from LinkedIn, concerning job postings (the analysis was published in October 2022), reveals that remote jobs listed declined by 4%, and the current economic challenges have even led some business leaders to question whether there may be a need to wind back offerings of flexible work according to the research.
What is clear is that the UK economy is in choppy waters, and the macroeconomic winds will make the voyage over the next few months (at least) challenging for all. Yet the shortages of skilled workers remain a brute fact and absent, a volte-face in respect of the UK immigration policy. Creative recruiters may continue to reap rich rewards by placing talent where it is most needed.